United States Court of Appeals,First Circuit.
John FANNING, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.
Decided: May 9, 2016
Defendant–Appellant John Fanning petitions this court for review of the Federal Trade Commission's (“the Commission”) summary decision finding him personally liable for misrepresentations contained on the website Jerk.com in violation of the Federal Trade Commission Act (“FTC Act”). We agree with the Commission's findings that Jerk.com materially misrepresented the source of its content and its membership benefits. Nonetheless, we agree with Fanning that portions of the Commission's remedial order are overbroad. We affirm the finding of liability and the remedial order recordkeeping provisions and order acknowledgment requirement. Because we conclude the remedial order's compliance monitoring provisions as to Fanning are overbroad, we vacate that portion of the Commission's order and remand for proceedings consistent with this opinion.
I. Background 1
In 2009, Fanning founded Jerk LLC (“Jerk”) and Jerk.com.2 From 2009 to 2014, Jerk operated Jerk.com.3
Jerk.com was a self-proclaimed reputation management website. Its homepage greeted users by asking them if they were “[l]ooking for the latest scoop on a world filled with jerks” and stated that “millions” of people “use[d] Jerk for important updates, business, dating, and more.” The homepage listed several benefits Jerk.com offered, including tracking one's own and other people's reputations, “enter[ing] comments and reviews for [other] people,” “[h]elp[ing] others avoid the wrong people,” and “prais[ing] those who help you.”
Jerk.com's main feature was its profile pages. Each page corresponded with a particular individual and displayed that person's name. The profiles allowed users to vote on whether someone was a “Jerk” or “not a Jerk” and displayed the total number of “Jerk” and “not a Jerk” votes received. Jerk.com users could also post anonymous reviews about a person, which were visible on that person's profile page. By 2010, Jerk.com contained 85 million profiles pages. Very few of these profile pages had reviews posted and those reviews that were posted were largely derogatory.
Jerk.com also had a “Remove Me!” page, which stated that individuals could “manage [their] reputation and resolve disputes” regarding content on their profile pages through a paid subscription. The “Remove Me!” page contained a link to a separate subscription page where users could enter their billing and credit card information to purchase a $30 membership. The subscription page reiterated that only paid members could “create a dispute” about the content of a profile.
Despite its large number of profile pages, Jerk.com had relatively few users. Jerk.com had a “Post a Jerk” page that allowed users to create a profile for themselves or others by entering a person's first and last name, e-mail address, university affiliation, and location. But Jerk created the vast majority of profiles by using a computer program that populated profile pages with names, photos, and other content obtained from searching Facebook—a fact Jerk.com did not disclose on any of its pages.