Two New Ripoff Report Cases Filed

Eric Goldman reminds us (here, here) that angry companies and individuals are still suing Xcentric Ventures, LLC and Ed Magedson left and right over reports submitted to Ripoff Report.  Ripoff Report is a website that allows users to post reports about individuals and companies that they believe have "ripped them off" or treated them unfairly.  The website has attracted much criticism and litigation for refusing to remove allegedly false reports and offering a service to aggrieved businesses called the "Corporate Advocacy Program" ("CAP"), under which, for a fee, the website will investigate "rip-off" reports targeting member companies and post prominent rebuttals to those reports.

Ripoff Report has been remarkably successful in fighting off lawsuits for defamation and other torts based on user-submitted reports.  In large part, this success is due to section 230 of the Communications Decency Act" ("CDA 230"), which states that no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." 47 U.S.C. § 230(c)(1)

Plaintiffs' lawyers have therefore been forced to get creative.  One possibility is to claim that Ripoff Report posts defamatory reports in order to extort money from aggrieved companies (see, for example, Cambridge Who's Who Publishing v. Xcentric Ventures), but at least one court has rejected the argument that the CAP program strips Ripoff Report of CDA 230 immunity.  See GW Equity, LLC v. Xcentric Ventures, LLC, No. 3:07-CV-976, slip op. at 11-12 (N.D. Tex. Oct. 8, 2008) (magistrate report and recommendation, subject to approval by district court).  A more common path is to allege the Ripoff Report creates or develops the allegedly defamatory content itself.  Two cases recently filed against Xcentric Ventures and Ed Magedson take this approach.

In Certain Approval Programs v. Xcentric Ventures, Certain Approval Programs, LLC, a company that provides real estate investment consulting services, and its CEO Jack Sternberg, sued Xcentric and Magedson in Arizona federal court.  They allege that an anonymous Ripoff Report user posted a defamatory report about them in August 2007, in which the user claimed that their "Buyers First" real estate investor education program was illegal and a "scam," and that Mr. Sternberg had been arrested for fraud in the 1990s and owed millions of dollars as a result.  Cmplt. ¶¶ 38, 51

In an attempt to get around CDA 230, the plaintiffs further allege that Xcentric and Magedson added their own defamatory content to the report by doing the following six things: 

  1. adding the words "Rip-off Report:" to the title created by the site user and using it to create a "title meta tag" (which generates the url for the webpage and the title for that page that appears in search engine results);
  2. using information submitted by the site user to generate a "description meta tag" (which generates the two lines of text displayed below the title in search engine results);
  3. creating "keyword meta tags" for the report using the words "rip-off, ripoff, rip off, Jack Sternberg Ken Preuss Buyers First, Company, Con Artists"; 
  4. providing the site user with the defamatory category "Con Artists"; 
  5. designing and publishing the website's logo that appears on each report and says "for consumers, by consumers," "Ripoff Report," and "Don't let them get away with it . . . let the truth be known!"; and
  6. creating and registering the domain name of the website --

Certain Approval and Sternberg claim that Ripoff Report's own content falsely suggested that they "rip off" consumers and are trying to "get away with it." Id. ¶ 51.  Regardless what one thinks about the merits of these allegations, the complaint in this case is well-crafted and sophisticated.  Among other things, it includes screenshots that walk you through the creation of a "rip-off" report and demonstrate how title and description meta tag data show up in search engine results.  Xcentric and Magedson filed an answer in September 2008, and the parties are headed into the discovery phase of the lawsuit.

The second case is more prosaic.  In Barnes v. Xcentric Ventures, A.H. Barnes, a California attorney who operates several businesses that help attorneys and other individuals find employment, sued Xcentric and Magedson in California state court. He alleges that anonymous users of Ripoff Report submitted false and defamatory reports claiming, among other things, that he was dishonest, that he was "cooking the books," and that he had engaged in a pattern of criminal activity including breaching the privacy of his customers, software piracy, data theft, and deliberately violating federal anti-SPAM laws and regulations.  Cmplt. ¶¶ 15-17

Trying to get around CDA 230, Barnes alleges that Ripoff Report and Magedson updated the title of the defamatory thread about him to include the statement "UPDATE Ex-Employee responds . . . SCAM, FRAUD and tons of SPAM." Id. ¶ 18.  He alleges more generally that Ripoff Report "deliberately and intentionally alters the content of its purportedly anonymous third-party postings to enhance the salaciousness and magnitude of known defamatory content." Id. ¶ 8.  As Eric Goldman notes,  this is a "'garden-variety' complaint . . . that doesn't break any new ground," and he's probably right to "smell summary judgment for the defense" on this one.  

We'll be monitoring these two in our legal threats database


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