I recently had a terrible customer service experience when purchasing from a well-known ecommerce company. The experience was so bad that it compelled me to write not just one poor review, but, instead, to post on seemingly every review site that a consumer could encounter. A customer service experience this bad could only be remedied by a change in policy, I thought.
But scenarios such as mine are an ecommerce merchant’s nightmare, which is why it is important for merchants to understand the law surrounding user reviews and the consequences for poor customer service.
Liability of Internet Service Providers
First, let’s start with some history. At common law, a publisher of content could be held liable to the same extent as the writer of that content. This means that a newspaper could be held liable for a false and defamatory article even if a columnist penned it. And when Internet publishers grew in prominence, this doctrine became a problem for them.
Two New York cases brought publicity to this issue. In a 1991 case, Cubby, Inc. v. CompuServe, Inc., a columnist posted defamatory comments about a competitor through the CompuServe service. The competitor sued CompuServe for libel, but the court ruled that CompuServe could not be held liable as a publisher of the defamatory content because CompuServe did not review it before it was posted. Without knowledge, the court reasoned, CompuServe could not be held liable for the defamation.
In 1995, however, another court took a contrary position. In Stratton Oakmont Inc., v. Prodigy Servs. Co., Prodigy, like CompuServe, was an Internet service provider. Prodigy hosted several bulletin boards, including one titled “MoneyTalk.”
But unlike CompuServe, Prodigy monitored and moderated its message boards and deleted some of the messages that contained offensive content. Since Prodigy edited the content of its message boards, the court reasoned, it could be held liable for the republication of defamation. To comply with the court’s reasoning, Prodigy would either need to hire someone to monitor the 60,000 posts that it received a day or give up moderation altogether.
The U.S. Congress saw this as a problem. Not only did this ruling impose additional risks on emerging Internet businesses, but it also created a disincentive to monitor content. To solve this problem, the Communications Decency Act of 1996 was enacted. Though portions of that law concerning pornography and child safety were ultimately ruled unconstitutional, Section 230 survived. It has remained in place to this day.
Section 230 of the Communications Decency Act states that no provider of an interactive computer service will be treated as the publisher or speaker of an information content provider. This means that an Internet service provider — such as Yelp, Google, or Rip Off Reports — will not be held liable for the reviews posted by its users even if those posts are false and defamatory. Additionally, a service provider cannot be held liable for its good faith efforts to monitor or restrict access to content. This means that, unlike the Prodigy case, a service provider can now moderate its content without fear.
Section 230 of the Communications Decency Act states that no provider of an interactive computer service will be treated as the publisher or speaker of an information content provider.
For review sites, Section 230 provides almost blanket immunity from claims of defamation. Thus, regardless of whether a review is defamatory, a service provider like Google, Facebook, or Yelp likely cannot be held liable for that defamation.
For Ecommerce, a Cost-Benefit
Thus, an ecommerce merchant that is the subject of defamatory or false reviews on those sites cannot easily have them removed. Instead, the merchant looking to remove a review must first file a lawsuit against a John Doe, send a subpoena to the service provider to obtain John Doe’s IP address, and then send a subpoena to John Doe’s Internet service provider to attempt to identify the poster of the review. If the poster can be identified, the complaint can be amended and the lawsuit can proceed against the named party. If, however, the poster uses a proxy server, VPN, or other anonymization software, there is a chance he or she may never be found.
Europe takes a different approach, however. Article 14 of the E.U. Electronic Commerce Directive states that service providers are provided with immunity from liability only where they do not have actual knowledge of the defamation or, upon receiving such knowledge, do not act immediately to remove the defamatory information.
Therefore, if your business is located in the E.U., and if it is the victim of a false and defamatory review, a service provider must remove that review upon receipt of notice that the review is defamatory. If the service provider does not remove the review, it can be held liable for defamation. This provides European ecommerce merchants with a cheaper remedy to remove false and defamatory reviews.
The best way to avoid defamatory reviews, however, is to provide good customer service. Since the cost of litigation far outweighs the cost of most products or services, an ecommerce merchant should be aware of this cost-benefit when determining whether it should refund a complaining customer’s money. The short term-pain of a refund is often far better than the long-term pain of litigation, or poor reviews.