Internet Library of Law
and Court Decisions

Federal Trade Commission - Internet Library of Law and Court Decisions - Updated November 27, 2007

Court finds defendants guilty of engaging in unfair business practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. Section 45(a), by obtaining and selling confidential customer phone records without the affected customers’ authorization.  The Court found that defendant Abika.com arranged for the purchase of these phone records from third party vendors, which they subsequently resold via their website to third parties.  Illegal means were used by these vendors to obtain the confidential phone records, a fact of which, the Court found, defendant was aware.

In reaching this result, the Court rejected defendants’ claim that they were immunized from suit by application of Section 230 of the Communications Decency Act (“CDA”).  Defendants attempted to come within the ambit of the CDA by casting themselves as a search engine that put those seeking to purchase phone records in touch with ‘researchers’ seeking to sell them.  This characterization of their conduct was rejected by the Court.   The Court held that CDA immunity was not available to defendants because the claims at issue did not seek to treat them as the publisher of information, a prerequisite to such immunity.  Rather, they arose out of defendants’ purchase and resale of confidential information to third parties that was obtained through illegal means.  The Court further held that CDA immunity was not available because of defendants’ role in causing the information at issue to be obtained.  As such, defendants were held to have ‘participated in the creation or development of the information, and thus do not qualify for Section 230 immunity.’

Finally, the Court rejected defendants’ claim that the FTC was equitably estopped by its prior failure to prosecute phone record brokers from doing so here.  Such alleged inactivity was insufficient to estop the government from enforcing the laws of the land.

Court holds that the FTC is likely to prevail on its claims that defendants violated the Federal Trade Commission Act ("FTCA"), 15 U.S.C. § 45(a)(1).  Defendants were charged with downloading to consumers' computers, without their knowledge or consent, both spyware and adware that delivered pop-up advertisements for anti-spyware software, as well as "exploit code" which altered consumers' home pages, and redirected their browsers to websites selected by defendants.  Apparently, this occurred when consumers visited defendants' websites.  The Court found that this conduct likely ran afoul of the FTCA's prohibition against the use of "unfair or deceptive acts or practices" in commerce.  The Court accordingly issued 'temporary injunctive relief' requiring defendants to remove from their websites the software script that allowed defendants to download this software to consumers' computers without their knowledge.

Court holds that the FTC is likely to succeed on its claim that defendants' practice of billing telephone line subscribers for international telephone calls made from their telephone lines for the purpose of viewing pornographic web sites violates Section 5(a) of the Federal Trade Commission Act ("FTC Act"). Such violation occurs because the line subscribers are billed even if they neither visited the websites in question nor authorized anyone to do so. The court enjoined defendants from continuing to utilize such billing practices to collect for visits to pornographic web sites unless either (i) the line subscriber receiving the bill has entered into a verifiable agreement authorizing such billing, or (ii) the bill expressly states that the line subscriber is not obligated to pay the bill unless he has personally agreed or authorized another to agree to pay for the services in question and provides the line subscriber with a convenient method to cancel the bill if such is not the case.