FTC v. Accusearch

Citation
Federal Trade Comm'n v. Accusearch, Inc. d/b/a/ Akiba.com, 2007 WL 4356786 (D. Wyo. Sept. 28, 2007), aff'd, 570 F.3d 1187 (10th Cir. 2009) (full-text).

Factual Background
Abika.com is a website that has sold various personal data, including telephone records.

Trial Court Proceedings
The Federal Trade Commission (FTC) brought suit against the operator of the website, Accusearch Inc., and its president and owner, Jay Patel (collectively, Accusearch), to stop Accusearch's sale of confidential information and to require it to disgorge its profits from the sale of information contained in telephone records. The FTC alleged that Accusearch's trade in telephone records (which are protected from disclosure under § 702 of the Telecommunications Act of 1996 constituted an unfair practice in violation of Section 5(a) of the Federal Trade Commission Act (FTCA). The district court granted summary judgment to the FTC, and after further briefing entered an injunction restricting Accusearch's future trade in telephone records and other personal information.

Appellate Court Proceedings
On appeal, Accusearch contended that (1) the FTC's unfair trade practices claim should have been dismissed because Accusearch broke no law and because the FTC had no authority to enforce the Telecommunications Act; (2) it was immunized from suit by the protections provided to websites by Section 230 of the Communications Decency Act of 1996 ; and (3) the injunction was unnecessary to prevent it from resuming trade in telephone records and was unconstitutionally overbroad.

The appellate court affirmed. First, the court held that conduct may constitute an unfair practice under §5(a) of the FTCA even if it is not otherwise unlawful, and the FTC may pursue an unfair practice even if the practice is facilitated by violations of a law not administered by the FTC, such as the Telecommunications Act. Second, Accusearch's claimed defense under the CDA fails because it acted as an "information content provider" (and thus is not entitled to immunity) with respect to the information that subjected it to liability under the FTCA. Finally, the injunction was proper despite Accusearch's prior halt to its unfair practices and the possibility that the resumption of those practices would be criminally prosecuted; and Accusearch waived in district court its claim on appeal that the injunction was overbroad.