This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.

Advertising Law Updates

| 3 minute read

What Does it Mean to be a "Verified" Seller Online?

There's been a lot of talk lately about what it means to be "verified" online.  A recent case decided by a federal court in Colorado just wrestled with this issue.  Here's the story.

A man placed an ad to sell a car through the online marketplace Letgo.  He placed the ad using the fake name, "James Worthy."  The fake Mr. Worthy was identified as a "Verified" seller on the site.  The car he was selling was actually a stolen car.  When a married couple came to look at the car in response to the ad, Mr. Worthy attempted to rob them at gunpoint, and when they resisted, he murdered them. 

A lawsuit was brought against Letgo on behalf of the heirs of the couple alleging, among other things, that the company misled customers by labeling Mr. Worth as a "Verified" seller.  The heirs argued that, by indicating someone is verified, this signaled to customers that the advertiser was a known person who was sincerely trying to sell something.  How were sellers actually verified?  In Mr. Worthy's case, he apparently obtained a verified account simply by demonstrating that he had a functioning phone number.  Letgo didn't perform any background check or other verification process. 

Does Letgo have Section 230 immunity? 

As an initial matter, Letgo moved to dismiss, arguing that Section 230 of the Communications Decency Act immunizes it from liability for content posted by users of its site.  In order for Section 230 to apply, a defendant needs to demonstrate that:  (1) it's a provider of an interactive computer service; (2) the  alleged liability is based on the defendant having acted as a publisher or speaker; and (3) the information is provided by another information content provider. 

They key issue the court considered here was whether the fake Mr. Worthy was the sole content provider of the content on which the heirs' claims are based.  In other words, was Letgo also a content provider because it provided the "Verified" label?  Letgo argued that it wasn't providing any content here, since the "Verified" label was simply a result of Mr. Worthy providing a name and a working telephone number.  At the motion to dismiss stage, the court didn't accept that argument, however, saying that the "Verified" designation was not "provided by" Mr. Worthy.  The court wrote, "The singular item of information relevant here is the 'verified' designation, and factually, it appears to be a product of input from both Letgo and its users." 

Did Letgo engage in false advertising? 

The heirs brought various claims against Letgo, including a claim for false advertising under the Colorado Consumer Protection Act.  In order to state a claim for false advertising in Colorado, a false or misleading statement must be made "with knowledge of its untruth, or recklessly and willfully made without regard to its consequences, and with an intent to mislead and deceive the plaintiff."  

The court dismissed the heirs' false advertising claims, holding that they had not sufficiently alleged that Letgo misrepresented what their verification process entailed.  The court wrote, "It is clear from the record that there is no factual basis for alleging that Letgo knew anything in the Brown ad was a lie, or that it acted recklessly or willfully, intending to induce" the transaction.  

What are some important take-aways?  

First, don't assume that Section 230 is going to provide immunity if you're layering your own content on top of a user's content.  If you're "verifying" a user's account, a court may very well find that the verification -- even if it is based on information provided by a user -- was at least in part provided by the brand.  

Second, although the plaintiffs weren't successful here, the decision turned on Colorado's stricter standards for providing a false advertising claim, which have a knowledge requirement.  It's often the case that advertisers are strictly liable for the advertising claims that they make.  So, if this case had been brought under another state's laws -- or if the FTC had brought the case under the FTC Act -- the result could have been quite different.

Roland v. LetGo, 2022 WL 17416664 (D.Co. 2022)

"The singular item of information relevant here is the 'verified' designation, and factually, it appears to be a product of input from both Letgo and its users"

Tags

cda, advertising, verified