ADventures in Law

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Back in February 2023, the FTC announced <a href="https://www.ftc.gov/news-events/news/press-releases/2023/02/ftc-sues-stop-interconnected-web-voip-service-providers-carrying-robocalls-pitching-phony-debt" target="_blank" rel="noreferrer noopener">a federal complaint</a> against a voice over Internet protocol (VoIP) provider that it alleged had delivered tens of millions of debt service calls to consumers nationwide. The FTC also sued the parties that used the VoIP provider’s services to market debt relief services. We do not often see much discussion about court decisions where FTC consumer protection claims are actually dismissed, but in this case – at least with respect to the VoIP provider – things did not go well for the FTC.

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Going after a VoIP provider in this context is a big deal and would be consistent with the general law enforcement goal of targeting entities that are more likely to have a significant impact on the problem at hand. If you get VoIP providers to block or not carry certain traffic that might be violative of other laws, you can often accomplish more than you can by just going after one entity that is using the VoIP provider’s services. It avoids the old whack-a-mole dilemma for enforcers.

But sometimes there are other laws that come into play. And this time it was <a href="https://www.vox.com/recode/2020/5/28/21273241/section-230-explained-supreme-court-social-media">Section 230</a> of the Communications Decency Act (CDA) that undid the FTC’s plans. Much has been written about the good and the bad of the CDA, but without doing a deep dive, it is a fairly controversial statute that generally immunizes online platforms from liability for content posted or provided by their users, including their advertisers. The CDA does not, however, immunize platforms from liability for content they themselves create or develop. &nbsp;There is, however, frequent discussion in Congress and elsewhere about <a href="https://www.cnn.com/2023/03/08/tech/senators-section-230-reform/index.html" target="_blank" rel="noreferrer noopener">amending the CDA</a>.

CDA issues do surface in FTC cases from time to time, particularly as the agency continues to broaden theories of liability and expand its circle of targets.

In the recent VoIP case we are discussing, the parties filed motions to dismiss the FTC’s lawsuit for a variety of reasons. The debt relief parties were unsuccessful, and litigation will continue against them.

The analysis was quite different for the VoIP provider, which wasn’t directly involved in the debt relief business. The FTC had charged that the provider, through its VoIP services, had provided <em>substantial assistance</em> to sellers or telemarketers <a>–</a> such as debt relief providers – in violation of the Telemarketing Sales Rule.

In a March decision, the court dismissed the case against the VoIP provider with prejudice, stating that it could identify “no facts that could cure this deficiency.”

So what went wrong here for the FTC? Well, the simple answer is the court held that the VoIP provider’s alleged conduct in this case was in fact protected by the CDA. The decision includes an extensive discussion of the various factors that go into a CDA analysis.

But in short, the VoIP provider was an interactive computer service that is subject to CDA protection, and in this case, the FTC’s theory of liability would have held the company liable for the content of the messages that it was transmitting on behalf of its third-party customers. The court emphasized that the company “is only liable according to the content of the ringless voicemails distributed to consumers.” In general, because the liability of the VoIP provider was premised upon the content of the messages that it was delivering, the approach here was not content neutral and the CDA protected the VoIP provider’s actions.

CDA decisions are sometimes unpredictable, but this decision does serve as a good reminder of how the CDA and the FTC Act can interact at times. No word yet on whether the FTC will be appealing this decision.

FTC Case Against VoIP Provider Collides with Section 230 of the Communications Decency Act