A Tale of Two Spokeos

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Screen Shot 2016-05-19 at 9.13.39 AMThe Supreme Court provided important guidance about Article III standing, especially what constitutes an injury sufficient to satisfy Article III, in the Spokeo v. Robins ruling from May 2016. At the time, it was unclear whether the ruling was more helpful to plaintiffs or defendants. Both sides expressed triumph. Reflecting that murky assessment, post-Spokeo standing rulings appear to be somewhat mixed. I have not surveyed the cases, but I would venture to guess that on balance they probably lean slightly towards plaintiffs. Two recent cases highlight the split:

Hancock v. Urban Outfitters: This case alleges a retailer wrongfully collected personal information in conjunction with a credit card transaction (Washington DC’s version of the Song-Beverly credit card act). The question is whether merely asking for (and collecting) such information created an sufficient injury to confer standing. The lower court dismissed on the merits, saying that a zip code is not an “address” and thus not covered by the statute. (Compare with Pineda v. Williams Sonoma, a case from the California Supreme Court coming to a different conclusion under the California statute.) Second, the court held that plaintiffs did not allege that the transactions would not have been completed absent the requested information.

On appeal, the D.C. Circuit remanded the case for dismissal, saying that plaintiffs failed to satisfy article III standing in the first instance. The court focused on the “bare procedural language” from Spokeo and said that the Court mentioned some examples of disclosure that would not support standing. Here, the plaintiffs’ complaints were one step removed—they were complaining about collection, and not even disclosure or misuse:

If, as the Supreme Court advised, disclosure of an incorrect zip code is not a concrete Article III injury, then even less so is Hancock and White’s naked assertion that a zip code was requested and recorded without any concrete consequence. Hancock and White do not allege, for example, any invasion of privacy, increased risk of fraud or identity theft, or pecuniary or emotional injury. Cf. Spokeo, 136 S. Ct. at 1549 (A “risk of real harm” or an “intangible” harm may satisfy Article III’s requirement of concrete injury.). And without any plausible allegation of Article III injury, the complaint fails to state a basis for federal court jurisdiction.

[For more on the potential social and legal differences between collecting, sorting and using data, see Eric’s article, Data Mining and Attention Consumption.]

Mey v. Got Warranty: This is a TCPA case where the plaintiff alleged that the defendant placed calls using auto-dialing equipment. Defendant moved to dismiss for lack of subject matter jurisdiction. The court stayed the case pending resolution of Spokeo. The court says Spokeo did not change the law and break new ground. The key question is whether unwanted calls cause “concrete harm” and the court emphatically (and in an 18 page order!) says yes. Such calls could cause monetary injury by depleting minutes or expend battery power. It constitutes an invasion privacy, which is a tort that has common law roots. It also could constitute a trespass. Interestingly, the court even goes as far to say that unwanted calls can constitute future harm:

Unwanted calls . . . cause a risk of injury due to interruption and distraction.

[Sidenote: if distraction is injury, sign me up for disability asap!]

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Given the split rulings, it’s tough to draw definitive conclusions about the effects of Spokeo on future cases. Spokeo will likely be a useful tool for defendants in information security and privacy cases. We’ve seen a slew of these types of cases (Song-Beverly Credit Card Act; Shine the Light statutes; data breach cases) grapple with standing because the plaintiffs object to the defendants’ technical statutory violation but cannot show any consequence of that breach to them. Given the absence of any meaningful harm to consumers from those technical breaches, some judges will use Spokeo to clear their dockets. Plus, the D.C. Circuit is an influential court, so the Hancock ruling should get some mileage. On the other hand, for a TCPA case, Spokeo is unlikely to help.

Mey v. Got Warranty, Inc., 2016 WL 3645195 (N.D.W.V. June 30, 2016)

Hancock v. Urban Outfitters, 14-7047 (D.C. Cir. July 26, 2016)

Related posts:

Will the Spokeo v. Robins Supreme Court Ruling Favor Plaintiffs Or Defendants? Uh…

9th Circuit Says Plaintiff Had Standing to Sue Spokeo for Fair Credit Reporting Violations

Court Revisits and Dismisses Fair Credit Reporting Act Lawsuit Against Spokeo — Robins v. Spokeo, Inc.

Court Allows Fair Credit Reporting Act Claims Against Spokeo to Move Forward — Robins v. Spokeo

Court Dismisses Class Action Against Spokeo for Lack of Standing — Robins v. Spokeo

“Manufactured” TCPA Suit Fails For Lack of Standing

Seventh Circuit: Data Breach Victims Have Standing Based on Future Harm

California Supreme Court Rules That a ZIP Code is Personal Identification Information — Pineda v. Williams-Sonoma

Ninth Circuit Turns Out The Lights on California ‘Shine the Light’ Case

July 31st 2016 Marketing, spam

Twitter May Be Liable for Sending Texts to Recycled Cellphone Numbers–Nunes v. Twitter

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Screen_Shot_2016-07-18_at_7_50_49_AM-This is a TCPA lawsuit against Twitter. The claims are based on text messages sent to phone numbers where the subscriber was a Twitter user and signed up to receive text updates but later the phone number got recycled to a new subscriber. As a result, the person now receiving Twitter’s SMS updates did not opt-in to receive them.

Twitter raised two possible defenses. First, it did not “make the call,” as that phrase is used in the TCPA. Second, it’s not responsible for the underlying content and thus immune under Section 230. The court rejects both defenses.

Did Twitter make the call within the meaning of the TCPA? The court says that Twitter converts its tweets into text and (as alleged by plaintiff) uses an auto-dialer. The only other possibilities for “who made the call” are the tweet’s author or the person who opted in originally. The court says the tweet author “can’t possibly” be the maker because this user has no control over who receives his or her tweets and does not even know who is signed up to receive text alerts. Thus, he or she has no idea whether they are even making the call. Similarly, the court says that the person who initially opted-in can’t be the maker of the call because all that person did was to sign up to receive tweets via text message:

[The idea that this person is the maker of the call is] contrary to the ordinary meaning of the word “make” – when someone signs up to receive a call from someone else in the future, he is not ‘making that call when it comes in.

[Eric’s comment: it makes me wonder if it’s possible *no one* was a “maker” under the statutory definition? The judge didn’t seem to consider that possibility.]

Because the plain language of the statute does not, in the court’s view, support Twitter, the court looks to a 2015 FCC ruling that addressed the issue of a platform’s liability for text messages initiated by users. The FCC looked at two apps, TextMe and YouMail. With respect to TextMe, the agency said that a user who invites people on his contact list to join the service is the one who initiates the call as he is picking among various contacts to determine who is invited. This is slightly different from both the subscriber of the previous number or the person sending the tweets—neither of them are actively sending the texts. YouMail similarly sends text messages based on the user’s preference. And the FCC relies on the app user’s “involvement in the process of creating and sending the messages in response to received calls,” in finding that the app user and not YouMail was the person who made the call.

The court also says the FCC’s interpretation of the goals and purposes of the TCPA favors the plaintiff. Commenters noted the recycled number problem to the FCC and argued that the previous owner of a recycled number should be considered the “called party”; so to the extent this party consented, callers who had received consent should be off the hook. The FCC rejected this approach, noting that one of the purposes of the TCPA is to protect consumers from unwanted calls, and the approach urged by the commenters would leave consumers unprotected. The court says that Twitter’s suggestion is at odds with the FCC’s interpretation of the TCPA and its purposes.

Twitter also argued that an adverse ruling would cause Twitter to reconsider providing text updates at all, but the court is not persuaded by this:

Finally, a few words in response to Twitter’s arguments about the potential consequences of this ruling. At oral argument, Twitter insisted that if it were deemed the “maker” of the calls by which tweets are sent to recycled cell phone numbers, it would have no choice but to stop sending those tweets. The implication seemed to be that this result would be unbearable. But even if Twitter made good on its promise to stop sending tweets by text message, Twitter users would be able to view tweets in all sorts of other ways: by checking their timelines on Twitter’s website or in Twitter apps, by enabling push notifications from their Twitter apps, or by signing up for email notifications from Twitter. It’s not at all clear, particularly in light of the FCC’s ruling about recycled numbers, why the need to disseminate tweets in this particular way (that is, by text message) should prevail over the need to protect owners of recycled numbers from getting unwanted texts.

Twitter also cited to the possibility of Southwest airlines being exposed to liability when it provides flight information updates via text message, but the court says this is unlikely. While there are multiple ways in which Southwest can update its customers, the update feature requires passenger input at the time of making a reservation.

Is Twitter Entitled to Section 230 Immunity: Twitter also argued it was entitled to protection under Section 230 because it did not author the tweets in question. Seems hard to dispute and an easy enough conclusion, right? Not so fast, says the court. Citing to Barnes, the court says that Twitter is not being treated as a publisher because “publication involves reviewing, editing, and deciding whether to publish or to withdraw from publication third-party content.” The court also says that the precise content of the messages is not the asserted basis of liability (it’s the form of the communication rather than its content).

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This is not the end of the road for Twitter. As the court notes, it could still successfully argue that it did not use an autodialer and thus escape TCPA liability. Yahoo won summary judgment in a TCPA case involving a re-assigned number on this basis. Unfortunately, the Third Circuit sent the lawsuit back for a second look at the autodialer issue. (See “Third Circuit Revives TCPA Case Against Yahoo”.)

Recycled numbers are a long-standing problem. As the court notes, the FCC grappled with aspects of it and came to an imperfect solution. A dissenting commissioner (cited by the court) made good points regarding how plaintiffs have capitalized on texts to recycled numbers. This case, along with the one from last week, are good data points for lobbyists who are looking to get the attention of a legislator. As for the recycled number problem, one possible middle ground solution would be to give a company one free message, provided it includes an opt-out mechanism. That message, while unwanted, would not be the basis for TCPA liability, but future messages can be presumed to be consented to since the recipient did not take the simple step of opting out?

Finally, the court’s section 230 ruling falls into the “WTF Is Going On With Section 230?” category. (See Eric’s post from last month, collecting cases). The court cites to Barnes for the proposition that publication involves review and editing, but it takes a bizarro-world approach. The whole point of section 230 is that since the intermediary did not create the content, it should not be held liable for it, regardless of whether it made editorial decisions regarding it, or, in the exercise of its editorial discretion, declined to do so.

Eric’s comments: Yuck. So much to dislike in this opinion.

Perhaps what bothers me most is the court’s (and the FCC’s) denigration of people who choose to receive tweets via text. There’s a tinge of hubris when the court presumes that people should not need texts because they have other ways to receive the tweets–especially in light of how many folks, especially millennials, strongly prefer text communications above other options. Judges (and the FCC) aren’t able to easily evaluate what’s the best medium for people to receive content; that’s why we prefer marketplace mechanisms to sort out questions like this. Furthermore, shutting down a communicate-by-text option may circumscribe information flows in ways we can’t anticipate or understand. In light of number portability where the volume of recycled numbers is already pretty small, I’m guessing that the percentage of texts sent to people who receive unwanted Twitter texts because the predecessor phone number subscriber opted-in is trivial–I’d be shocked if it were even 10%, but I’d expect it to be 1% or less. As a result, the net effect of this ruling is that legal protection for a minuscule minority trumps the communication desires of a majority of Twitter users who opt-into text messages. That’s just bad policy.

It also makes me wonder about the text message exceptionalism of regulating text messages as a medium. As I discussed in my Coasean Analysis of Marketing paper from over a decade ago, the TCPA is a weird opt-in outlier compared to other communication media. Rulings like this highlight its flaws. By giving the minority veto power over the media, rulings like this turn the TCPA into a plaintiff’s dream and doom text messaging as a fully-functional communications media.

The Section 230 analysis is indeed bizarre because it gets the analysis precisely backwards. Section 230 is supposed to mean that intermediaries aren’t liable for third party content whether or not they exercise editorial discretion. They can edit, or not, and the legal outcome is supposed to be the same. Indeed, Section 230’s real innovation was providing the immunity even for intermediaries that exercise editorial discretion; the default common law has always been that intermediaries that don’t exercise editorial discretion lack the necessary control to take liability (i.e., they face less liability because they act as “passive conduits”). Section 230 eliminated the distinction between active editors and passive conduits. Yet, here, the court turns all of this on its head and says that Twitter loses Section 230 because it doesn’t exercise editorial control and acts as a passive conduit. The judge says:

Twitter does not “review” the content of tweets. It does not “edit” the content of tweets. It does not make decisions about whether to send out a tweet.

Agreed! Yet, by listing all of these ways Twitter acts as a “passive conduit,” the judge is proving to himself why Twitter shouldn’t be liable. So…WTF?

As part of its reasoning, the court then calls Twitter’s text messages a “nuisance” and tried an offline nuisance analogy that I can’t bring myself to discuss. I directly addressed–and, I’d like to think, provided persuasive arguments against–the attempts to analogize marketing to “nuisances” in my Coasean Analysis of Marketing article. As a result, it’s disappointing to see a judge embrace this tired and analytically lacking analogy in 2016.

Eric’s Note about Judge Grewal:

This opinion also got some attention because of Judge Chhabria’s lengthy shout-out to Judge Grewal, a rare judge who tweeted and who recently departed the bench for a job at Facebook:

Take, for example, erstwhile Magistrate Judge Paul Grewal, who recently left the bench to work for one of Twitter’s competitors. Apparently 964 people are interested in what Judge Grewal has to say [including me!], because that’s how many Twitter followers he has. In early June 2016, during his last two days on the bench, Judge Grewal posted nine tweets. For example, he said: “Anyone looking for a screaming deal on a slightly-worn judicial robe? I’ve got one ready to move.” In another example (one he was regretting until Game 5 but now is very proud of), Judge Grewal said the following about the NBA Finals: “Here comes @KyrieIrving. Count on it.” On his final day, he said: “Last claim construction issued; it’s time to go. Thank you N.D. Cal. from the bottom of my heart.”

The gratitude Judge Grewal feels towards the Northern District pales in comparison to our appreciation of him. In a few short years, due to his expertise in intellectual property law and his overall judgment and wisdom, Judge Grewal became not merely one of the most important members of the Northern District, but one of the most important members of the federal judiciary. He will be sorely missed.

All of this praise is richly deserved, but I wonder: how much will (former) Judge Grewal still tweet now that he’s working for the competition?

Case citation: Nunes v. Twitter, 14-cv-02843-VB (N.D. Cal. July 1, 2016) [pdf]

Related posts:

“Manufactured” TCPA Suit Fails For Lack of Standing

Does Two-Factor Authentication Violate the TCPA?–Duguid v. Facebook

TCPA Claim Against Non-Sender Fails

Third Circuit Revives TCPA Case Against Yahoo

Court Rejects TCPA Claim on the Basis of Implied Consent

Recent FCC Order Helps Shopkick Defeat TCPA Claims

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Ghostwritten Attorney Newsletter is an “Ad” for TCPA Junk Fax Law Purposes–Holtzman v. Turza

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC

Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

Cellphone Spam Violates TCPA–Joffe v. Acacia Mortgage

Will the Spokeo v. Robins Supreme Court Ruling Favor Plaintiffs Or Defendants? Uh…

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

July 19th 2016 Marketing, spam

“Manufactured” TCPA Suit Fails For Lack of Standing

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Screen Shot 2016-07-08 at 12.19.25 PMThis is a TCPA lawsuit over unsolicited calls. Although plaintiff resided in Pennsylvania, she purchased 35 pre-paid phones with Florida area codes. The area codes were selected because they are comparatively economically depressed and thus more likely to get collection calls.

Discovery revealed that she bought the phones with the goal of receiving unsolicited calls and then filing TCPA lawsuits. Plaintiff was asked about this during her deposition, and her testimony is damning. The court quotes extensively from it, but a sampling is below:

q. Why do you have so many cell phone numbers?
a. I have a business suing offenders of the TCPA business — or laws.
q. And when you say business, what do you mean by business?
a. It’s my business. It’s what I do.
q. So you’re specifically buying these cell phones in order to manufacture a TCPA? In order to bring a TCPA lawsuit?
a. Yeah.

q. So is there another purpose that you use these cell phones for other than –
a. No.
q. — to — no. So the purpose is to bring a TCPA lawsuit?
a. Correct.
q. Does anyone you know ever call you at these phone numbers?
a. No, ma’am.
q. Did you ever use any of these phone numbers to call anyone?
a. No, ma’am

Based on this, the defendant (Wells Fargo) asserted defenses including: consent, that she invited the injury and assumed the risk. The consent defense does not satisfy the technicalities required under the TCPA. The court says, citing to the most recent FCC rules, that the defenses of assumption of risk and invitation of the injury do not apply to the TCPA. During the FCC proceedings, a commenter had specifically requested a bad faith defense in the scenario where a plaintiff manufactured a lawsuit, by waiting to notify the calling party about a number re-assignment, but the Commission rejected this request. While not directly on point, the court says that this means assumption of risk and invitation of injury are inapplicable to the TCPA.

Finally, the court settles on standing and says that plaintiff has not suffered injury in fact. Her testimony reflected that she did not suffer a violation of privacy when receiving the calls. As an alternative to privacy harm she argued that she suffered economic harm, but the court says she cannot allege this either. Citing to the data breach cases and Clapper, the court says that she cannot claim standing based on her loss of phone minutes or the money she expended to purchase the phones. Interestingly, Spokeo only merits a passing reference in the ruling.

Even assuming plaintiff has constitutional standing, the court says she does not have prudential standing. One of the elements of prudential standing is that the litigant’s interests are within the “zone of interests” sought to be protected by the statute, and that’s not the case here. In enacting the TCPA, Congress sought to protect those who suffered the nuisance of receiving unwanted calls, and as someone who purposefully bought phones and sought out calls, she does not qualify.

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Ouch, this is bad. The plaintiff’s deposition testimony could not have been worse. Pro-tip: I don’t think you ever want to admit that your are in the business of filing lawsuits.

The plaintiff’s scheme feels very similar to Gordon v. Virtumundo, where the court slammed the plaintiff for manufacturing the claim in question. Another case that falls into this genre is Beyond Systems, where spam emails were routed through out-of-state servers to take advantage of the other state’s spam laws. The courts in these cases relied on slightly different theories, but reached the same result.

I wonder if cases like this will be the proverbial straw that breaks the TCPA camel’s back. It’s the type of case that could get the attention of a legislator who was interested in revising and reforming the statute.

Legal doctrines aside, courts always find a way to turn away plaintiffs who manufacture claims. I wonder if defendant will seek a fee-shifting ruling.

Case citation: Stoops v. Wells Fargo, No. 3:15-83 (W.D. Pa. June 24, 2016)

Related posts:

Does Two-Factor Authentication Violate the TCPA?–Duguid v. Facebook

TCPA Claim Against Non-Sender Fails

Third Circuit Revives TCPA Case Against Yahoo

Court Rejects TCPA Claim on the Basis of Implied Consent

Recent FCC Order Helps Shopkick Defeat TCPA Claims

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC

Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

Cellphone Spam Violates TCPA–Joffe v. Acacia Mortgage

Will the Spokeo v. Robins Supreme Court Ruling Favor Plaintiffs Or Defendants? Uh…

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

July 9th 2016 Marketing, spam

Preemption Dooms Suit Over LinkedIn Group Spam

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Screen Shot 2016-07-05 at 7.59.10 AMThis is a lawsuit over spam sent to the member of a LinkedIn group. The common sense failings underlying the claims speak for themselves, but the court ends up dismissing on preemption grounds.

Plaintiff was a member of the “C, Linux and Networking Group” on LinkedIn. He alleged that he received 86 emails advertising various domain names such as “linkedininfluence.com,” “paidsurveyauthority.com,” and “takesurveysforcash.com,” among others. The emails were sent by seemingly fictitious persons, or at least people with names that sounded like they were fake (“Whitney Spence,” “Arelia Rosales,” and “Nona Paine”) (no offense to people who really have those names!). The emails were all sent through LinkedIn’s domain name, as they had to be.

Plaintiff asserted violations of California’s spam statute, which prohibits (1) the use of a third party domain name without permission; (2) falsified, misrepresented, or forged header information; and (3) misleading subject lines. Claims for misleading emails under the statute have to allege more than just mere inaccuracy, in order to escape federal preemption. See Gordon v. Virtumundo. The court rules that the allegations here do not suffice.

The court says the arguments raised by plaintiff are a variant of the arguments rejected in Virtumundo. Moreover, cases following Virtumundo have held that neither the “from” line nor the domain name in question are subject to an accuracy requirement. Nor do they have to readily identify the advertiser or sender in question.

As characterized by the court, Plaintiff did not attempt to meaningfully address preemption via Virtumundo, but tried to rely on Balsam v. Trancos, a California appellate court case where the court said that using a domain name that neither identifies the sender nor can be readily looked up via WHOIS can be misleading under California’s spam statute. The court distinguishes Balsam because the plaintiff didn’t allege the email headers were non-traceable and false.

Finally, Plaintiff contended that he had to open an email to determine the identity of the actual sender, but this argument is also foreclosed by relevant case law. Several cases have held that the identity of the sender need not be ascertainable from the from line or header—i.e., senders can force recipients to open commercial emails to figure out who they are from.

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Despite the waning interest level over spam cases, this dispute is worth noting. Most importantly, it is another case that rejects plaintiff’s attempt to nitpick over “from” line attributes. Plaintiffs consistently try these arguments and they have consistently failed, and they were bound to fail here as well.

For plaintiffs, spam litigation based on CAN-SPAM has been a bust following Virtumundo. Plaintiffs turned instead to California law and achieved some success in cases such as Trancos. But application of a robust preemption doctrine, as in this case, limits the viability of state law claims.

The fact that the claims here were over spam sent to a LinkedIn group are worth noting. Any group of this nature is bound to become overrun with spam over time, whether in the nature of off-topic messages or outside commercial emailers. This is a problem that LinkedIn is in a better position to try to address. (And under federal law unlike under California law, only the ISP is given standing to bring anti-spam claims.) But members of the group should not be litigating these claims. They have a ready non-legal solution at their disposal…hello, unsubscribe button!

Case citation: Silverstein v. Keynetics, 16-cv-00684-DMR (N.D. Cal. June 27, 2016)

Related posts:

Two Recent Spam Cases Look at Falsification of Origin and Subject Line Claims

No Spam Lawsuit When Plaintiff Asked For The Emails–Beyond v. Kraft

California Anti-Spam Law Doesn’t Require Sender’s Name In The ‘From’ Line or Domain Name

Shopkick Unable to Shake Text Spam Complaint — Huricks v. Shopkick

Lawyer’s Suit Over “Professional Recognition” Spam Flops

Path May Be Liable for Text-Spamming Users’ Contact Lists

CAN-SPAM Preemption Doesn’t Apply To Fraud…And More

Advertiser May Have Claims Against SEO Firm Using Undisclosed Spammy Practices

Court Accepts Narrow View of CAN-SPAM Preemption but Ultimately Dismisses Claims – Davison Design v. Riley

Spam Arrest’s Sender Agreement Fails Because Email Marketer’s Employees Lacked Authority–Spam Arrest v. Replacements (Forbes Cross-Post)

July 6th 2016 Marketing, spam

Does Two-Factor Authentication Violate the TCPA?–Duguid v. Facebook

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Plaintiff sued Facebook alleging TCPA claims on behalf of a putative class. Facebook sends text messages when someone logs in to their account via a new or unrecognized device. Plaintiff was a non-Facebook user who received these messages. Unfortunately, despite his efforts to get Facebook to stop sending such messages, including responding to the messages with opt-out requests, and contacting Facebook through other means, the messages did not stop.

The key question is whether plaintiff adequately alleges use of an “automatic telephone dialing system” (ATDS). The court says it’s often difficult for plaintiff to make specific allegations about the use of ATDSs, because the plaintiff would not have any information regarding the specific systems utilized by a TCPA defendant. Some courts give plaintiffs leeway in satisfying their pleading obligation, but courts are slightly more permissive when the allegations suggest the sending of mass texts, in contrast to what plaintiff alleged here. Where a plaintiff’s allegations suggest more “direct targeting,” as plaintiff did here, courts often find insufficient an unsupported pleading that an ATDS was used. Plaintiff tried to rely on a 2003 FCC order that the capacity to produce or store random or sequential numbers is not a necessary feature of an ATDS, but the court rejects this argument.

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The TCPA is a strict statute that many companies have paid for running afoul of. As Eric notes below, the messages here are useful, and can hardly be characterized as marketing messages. That did not stop plaintiff from suing. Plaintiffs have gone so far as to sue over confirmatory opt-out messages, but as the court notes here, the majority of courts find those are not actionable.

Drafters sought to define the universe of actionable texts by reference to the equipment used to send it, but that definition turned out to be clunky at best. Courts have recently gone back and forth at the pleading stage on the topic of whether a plaintiff adequately alleges the use of an ATDS, and this is the most recent example.

Eric’s Comment: This case never mentions two-factor authentication, but that’s the clear implication of the case. Facebook’s text message sought to increase the security of Facebook accounts by sending a login notice to a physical item–the cellphone–presumably in the accountholder’s possession. (The fact that the notification got misdirected in this case may raise other issues about the efficacy of Facebook’s implementation). If the TCPA makes it illegal to send those kinds of security notices, it could undermine some of the most widely used two-factor authentication techniques. Fortunately, the court rejects the effort; unfortunately, the TCPA’s poor drafting and massive footprint in the mobile world means we probably haven’t heard the last word on this topic. So I see this as an indication of how an overreaching sloppy attempt to protect “privacy” like the TCPA may ultimately hamper much-needed and socially beneficial security measures.

Case citation: Duguid v. Facebook, 2016 WL 1169365 (N.D. Cal. Mar. 24, 2016). The complaint.

Related posts:

TCPA Claim Against Non-Sender Fails

Group Text Services Grapple with TCPA Class Actions

Debt Collection Text May Result in Liability under the Telephone Consumer Protection Act — Gutierrez v. Barclays Group

Another Competitive Keyword Advertising Lawsuit Fails–Infogroup v. DatabaseLLC

Shopkick Unable to Shake Text Spam Complaint — Huricks v. Shopkick

Lawsuit Against Adware Vendor Fails–Halperin v. Text Enhance

Path May Be Liable for Text-Spamming Users’ Contact Lists

Sending a “DTF?” Text Message Supports Restraining Order — Finigan v. Weinberg

Court: Customer Consents to Receive Texts by Providing Phone Number to Pharmacy – Pinkard v. Wal-Mart Stores, Inc.

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Courts Allows Text Spam Class Action Against Voxer, a Cell Phone Walkie-Talkie App — Hickey v. Voxernet

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Text Spam Class Action Against Jiffy Lube Moves Forward – In re Jiffy Lube Int’l, Inc., Text Spam Litigation

Text Spam Lawsuit Against Citibank Moves Forward Despite Vague Allegations of Consent — Ryabyshchuk v. Citibank

March 29th 2016 Marketing, spam

YouTube Wins Another Case Over Removing And Relocating User Videos (Forbes Cross-Post)

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Photo credit: RELOCATE word written on wood block // ShutterStock

Photo credit: RELOCATE word written on wood block // ShutterStock

I recently blogged about a lawsuit against YouTube for taking down a user’s video and relocating it to a different URL. Users get upset when their videos are removed-and-relocated because the process strips the video of its view count and any user comments, breaks any inbound links and potentially makes the user look like he or she did something wrong. However, aggrieved YouTube users aren’t finding much success in court, as a recent California appeals court ruling highlighted.

Jan Lewis ran a YouTube channel called “bulbheadmyass”, where she posted videos of her band “Remington Riders.” YouTube deleted her channel in 2012, saying it thought she had spammed other YouTube users in violation of the no-spamming clause in YouTube’s terms of service/TOS. (The actual TOS provision says “You agree not to solicit, for commercial purposes, any users of the Service with respect to their Content.” I’m using the euphemism “spam” as a shorthand). YouTube eventually restored Lewis’ account access, which allowed her to restore her videos at new URLs.

The appeals court rejects Lewis’ two primary legal arguments. First, YouTube’s TOS contained a lengthy limitation of liability clause that successfully eliminated Lewis’ claims for any damages:

the limitation of liability clause encompassed Lewis’s claim that YouTube wrongfully failed to include her videos, the number of views of these videos, and the comments on the videos by other YouTube visitors on its Web site….By claiming that YouTube wrongfully deleted her videos, the number of views of the videos, and the comments on the videos, Lewis is claiming that YouTube failed to do as it should by omitting content on its Web site.

Second, Lewis sought to compel YouTube to restore the old URLs, comments and view counts. The court says YouTube’s TOS never promises that:

there is no provision in the Terms of Service that requires YouTube to maintain particular content on the Service or at a particular location on the Service. There is also no provision in the Terms of Service pursuant to which YouTube is obligated to display view counts or comments associated with videos. There is nothing in the Terms of Service even suggesting that YouTube is a storage site for users’ content.

For these reasons, the court dismissed her claim.

While the court’s opinion never uses the term “spam,” it appears that Lewis and other similarly-situated plaintiffs are being caught in what I’ll characterize as YouTube’s anti-spam crackdowns. Ultimately, other YouTube content suppliers and users want YouTube to discourage spammers from overrunning YouTube and undermining the credibility of its systems. It’s a little unclear if YouTube’s anti-spam efforts are over-inclusive and thus inadvertently ensnaring legitimate activity. It’s entirely clear, however, that YouTube won’t be legally liable for its anti-spam initiatives even if it’s being overzealous.

Case citation: Lewis v. YouTube LLC, 2015 WL 9480614 (Cal. App. Ct. Dec. 28, 2015)

January 5th 2016 spam

TCPA Claim Against Non-Sender Fails

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Plaintiffs sued American Eagle Outfitters and Experian, alleging claims under the TCPA for unwanted text messages. American Eagle is the retailer, and Experian provides marketing services. But neither of these entities actually pressed the “send” button. We’ve seen disputes over whether the defendants used an “automatic telephone dialing system” but this particular dispute turned on who actually sent the messages in question.

No direct liability as senders

Plaintiffs implicitly acknowledged Archer, a non-party who had declared bankruptcy, actually sent the messages. The allegations were specific about who did what leading up to the actual sending, but the court notes uses the passive voice for the last step:

1) AEO provides Experian with the campaign request form; 2) AEO deploys to Experian a list of numbers to which texts will be sent (“Campaign Ready File”); 3) Experian sends the information to Archer USA, Inc.’s (“Archer”) texting platform; 4) Experian schedules text messages to be sent; and 5) text messages are sent. [emphasis added]

The text of the statute and cases interpreting it have found that the party who “actually sent the message” can be directly liable.

Plaintiffs argued, citing to the most recent FCC ruling, that a person who does not actually hit send can be so involved in the process that they can be held directly liable. The court disagrees. The FCC’s interpretation is offered in the context of a different part of the statute which uses the word “initiate” rather than “make” (and is applicable to sellers).

No vicarious liability

The court assumes that vicarious liability is cognizable under the TCPA, but says plaintiffs failed to allege any facts regarding the nature of the relationship between Experian and Archer:

Significantly absent from Plaintiffs’ allegations, however, is any factual content regarding the relationship between Experian and Archer. Plaintiffs seem to suggest that the allegations that Experian “had the right to control the sending of the texts” and “in fact controlled and even scheduled the sending of each segment of the texts” are sufficient to plead Experian’s vicarious liability for Archer’s actions. Pls. Opp’n at 12. Indeed, Plaintiffs argue, without support, that “[w]hether Experian Marketing sent the texts via Archer’s messaging platform or whether Archer sent the texts after Experian Marketing directed it to do so is irrelevant to the issue of vicarious liability.” Id. But to plead vicarious liability under the TCPA in accordance with traditional tort principles, Plaintiffs must allege some facts regarding the relationship between an alleged principal and agent (or an alleged agent and sub-agent) and cannot simply allege general control in a vacuum.

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Courts seem to be taking a closer look at TCPA cases. This is a good example of a court taking an unsympathetic view of what looks like a run-of-the-mill TCPA claim. The plaintiffs here are not suing over confirmatory texts or a single text that preceded an opt-out.

This case raises the question of whether the sender, the platform, or the entity advertised should be held liable for unwanted commercial texts. We’ve seen this issue come up in the group text platform and spam/email scenarios, among others.

The court is fairly strict here, and despite the numerous allegations that Experian was the driving force behind the texts, lets it off the hook. The court takes a pretty restrictive view of the path to liability for Experian. While we haven’t seen many rulings delve into the agency issue, the Ninth Circuit issued one from 2014 involving Taco Bell that comes to mind. (“TCPA Claim Against Taco Bell Fails For Lack of Agency”.) And it makes me think this one is appeal-worthy.

Case Citation: Melito v. American Eagle Outfitters, Nos. 14-CV-02440 (VEC), 15-CV-00039 (VEC), 15-CV-02370 (VEC) (S.D.N.Y. Nov. 30, 2015)

Related posts:

Group Text Services Grapple with TCPA Class Actions

Debt Collection Text May Result in Liability under the Telephone Consumer Protection Act — Gutierrez v. Barclays Group

Another Competitive Keyword Advertising Lawsuit Fails–Infogroup v. DatabaseLLC

Shopkick Unable to Shake Text Spam Complaint — Huricks v. Shopkick

Lawsuit Against Adware Vendor Fails–Halperin v. Text Enhance

Path May Be Liable for Text-Spamming Users’ Contact Lists

Sending a “DTF?” Text Message Supports Restraining Order — Finigan v. Weinberg

Court: Customer Consents to Receive Texts by Providing Phone Number to Pharmacy – Pinkard v. Wal-Mart Stores, Inc.

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Courts Allows Text Spam Class Action Against Voxer, a Cell Phone Walkie-Talkie App — Hickey v. Voxernet

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Text Spam Class Action Against Jiffy Lube Moves Forward – In re Jiffy Lube Int’l, Inc., Text Spam Litigation

Text Spam Lawsuit Against Citibank Moves Forward Despite Vague Allegations of Consent — Ryabyshchuk v. Citibank

December 23rd 2015 Marketing, spam

Third Circuit Revives TCPA Case Against Yahoo

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A Yahoo user alleged that he purchased a phone that came with a preassigned telephone number. The previous subscriber of this number apparently set his account so emails sent to his Yahoo account triggered a text message to this phone number (which was now reassigned to plaintiff). Plaintiff allegedly received a staggering 27,000 text messages, and he tried to resolve the issue with Yahoo to no avail. Even having an FCC representative get on a call with a Yahoo customer service representative did not solve the problem.

He filed a lawsuit asserting TCPA claims. (At the statutory damage amount of $500 per message, he would be entitled to a whopping $13 million in damages.) The district court granted summary judgment to Yahoo. Blog post on the district court ruling here: “Yahoo! Scores Significant Win in Email-to-SMS Lawsuit”. The TCPA restricts calls made using equipment that has “the capacity . . . to store or produce . . . numbers to be called, using a random or sequential number generator.” (See Satterfield v. Simon & Schuster.) The Third Circuit addresses two issues on appeal.

First, plaintiff argued that regardless of how the numbers were generated, if the equipment had the ability to dial sequential numbers from a list (no matter how generated), this fit the definition. The Third Circuit did not find this argument convincing, saying that the focus of the statute is on the capacity to generate random or sequential numbers.

Second, the court focused on the system’s “ latent capacity” to make phone calls, and concluded unhelpfully “so long as the equipment is part of a ‘system’ that has the latent ‘capacity’ to place autodialed calls, the statutory definition is satisfied.” Against this definition, the court says Yahoo’s declaration was too conclusory because it failed to explain how exactly Yahoo’s equipment lacked the requisite capacity. The court remands for further consideration of this issue.

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The definition of “autodialer,” which is already unhelpfully broad (and as the court notes, out of touch with current technology and practices), becomes even broader. Equipment that is part of a system that has the “latent capacity” to generate random or sequential numbers could be pretty much any modern device. The court struggles with the definition and, in the end, seems to punt on it. Although unpublished, the decision is worth noting because it means Yahoo has to spend another round litigating the autodialer issue in the trial court. (Yahoo did not seek re-hearing.) I’m curious about the court’s rationale for sending this back, and whether this was more procedurally or substantively motivated.

As the court notes, the FCC’s recently issued ruling [pdf], dealing with a range of TCPA issues, arrived at a mixed result on the auto-dialer issue. It concluded that number generation is the focus, rather than being able to dial from a list of numbers (no matter how generated). This interpretation was somewhat narrow and marketer-friendly. But the fact that it looked to whether the system overall (rather than one piece of equipment) had the theoretical capacity cuts the other way, and makes it that much easier for a plaintiff to allege use of an auto-dialer.

Phone number reassignment is a perennial TCPA problem, and the FCC ruling expressly addressed it, giving callers a one free pass if they don’t have knowledge of reassignment and have reasonable basis to believe they had valid consent. The FCC required consent to be from the “current” subscriber, and placed the burden on the sender to deal with making sure it had consent from the right party. Commissioner Pai sharply dissented on this (and other points), noting it sets up a litigation landmine. Yahoo could not take advantage of this exception likely due to the number of text messages at issue and its failure to stop after the recipient expressly requested, but I thought the FCC’s treatment of the number reassignment issue was also worth noting.

Case citation: Dominguez v. Yahoo, Inc., No. 14-1751 (3d Cir. Oct. 23, 2015)

Related posts:

Recent FCC Order Helps Shopkick Defeat TCPA Claims

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Ghostwritten Attorney Newsletter is an “Ad” for TCPA Junk Fax Law Purposes–Holtzman v. Turza

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC

Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

Cellphone Spam Violates TCPA–Joffe v. Acacia Mortgage

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

California Anti-Spam Law Doesn’t Require Sender’s Name In The ‘From’ Line or Domain Name

Shopkick Unable to Shake Text Spam Complaint — Huricks v. Shopkick

Path May Be Liable for Text-Spamming Users’ Contact Lists

Yahoo! Scores Significant Win in Email-to-SMS Lawsuit

December 8th 2015 Marketing, spam

Court Rejects TCPA Claim on the Basis of Implied Consent

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Plaintiff sued on behalf of a putative class, alleging that he received marketing messages from Five Stars Loyalty that violated his rights under the TCPA.

Plaintiff had lunch at a Flame Broiler restaurant and asked the cashier about the Five Stars logo he noticed on the window. The cashier asked for plaintiff’s telephone number, swiped a card and handed it to plaintiff. Shortly thereafter, plaintiff received the following “welcome” text message from Five Stars:

Welcome to Five Stars, the rewards program of Flame Broiler. Reply with your email to finish registering and get free pts! Txt STOP to unsubscribe.

The court says that plaintiff consented to receive the message and therefore his claim fails.

The message is not an advertisement: The key question is whether the text message constituted an advertisement, in which case prior written consent is required. If not, consent need not be written and can be implied by circumstances. The court cites to Chesbro v. Best Buy, a Ninth Circuit case holding that a call exhorting plaintiff to redeem Best Buy “Reward Zone” points constitutes an advertisement. (Blog post on the Chesbro case here: “9th Circuit Zings Best Buy Over Robocalls – Chesbro v. Best Buy”.) The court contrasts the message in this case from the one in Chesbro, noting that the message here did not urge plaintiff to redeem any points, or direct him to a location where such points could be redeemed. Rather, the message was just a part of the overall registration process.

Consent can be implied: Given that the message was not an advertisement under the TCPA, consent can be implied, and turning over a telephone number without limiting instructions is sufficient to infer consent. This interpretation of consent is affirmed by the FCC’s most recent order (2015) interpreting the TCPA.

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Retailers have to tread carefully when collecting information from a consumer. (See generally, the California cases dealing with the collection of personal information by retailers.) Nevertheless, it’s an activity retailers continue to engage in, and here, it appears that the plaintiff’s telephone number was sought not as a condition of sale, but in response to a question about a rewards program. As the court notes, this is one of many rulings holding that handing over your phone number without imposing an affirmative restriction equals implied consent to receive a text message. (See also Pinkard v. Wal Mart, a 2012 case dismissing TCPA claims based on implied consent.) That plaintiffs sued over this message is a testament to how risky text messaging is as a marketing channel.

The court’s efforts to distinguish Chesbro is worth noting. The distinction between advertising and non-advertising content comes up often, and the court takes a common sense-based approach here. This issue has come up in the junk fax context as well, as noted in this blog post on Sandusky v. Medco.

Case citation: Daniel v. Five Stars Loyalty, Inc., 15-cv-03546-WHO (N.D. Ca. Nov. 24, 2015)

Related posts:

Recent FCC Order Helps Shopkick Defeat TCPA Claims

TCPA Claim Against Taco Bell Fails For Lack of Agency

TCPA Claim Over Yahoo!’s IM to SMS Messaging Survives Summary Judgment

Confirmatory Opt-out Text Message Not Actionable Under the TCPA — Ryabyshchuck v. Citibank

Franchisor Isn’t Liable Under the TCPA for Franchisees’ Text Message Campaign – Thomas v. Taco Bell

Confirmatory Opt-Out Text Message Doesn’t Violate TCPA – Ibey v. Taco Bell

Group Text Services Grapple with TCPA Class Actions

Court Rejects Constitutional Challenge to TCPA Based on Vagueness in “Prior Express Consent” Exception — Kramer v. Autobytel, Inc.

Ghostwritten Attorney Newsletter is an “Ad” for TCPA Junk Fax Law Purposes–Holtzman v. Turza

Another Court Finds that TCPA Applies to Text Messages — Lozano v. Twentieth Century Fox Film Corp.

Court Finds that SMS Spam Messages are Subject to the TCPA and Rejects First Amendment Defense — Abbas v. Selling Source, LLC

Ninth Circuit Revives TCPA Claim–Satterfield v. Simon & Schuster

Cellphone Spam Violates TCPA–Joffe v. Acacia Mortgage

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

California Anti-Spam Law Doesn’t Require Sender’s Name In The ‘From’ Line or Domain Name

Shopkick Unable to Shake Text Spam Complaint — Huricks v. Shopkick

Path May Be Liable for Text-Spamming Users’ Contact Lists

Yahoo! Scores Significant Win in Email-to-SMS Lawsuit

December 7th 2015 Marketing, spam

Weekly SEO Recap: AMPlified spam

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Joost's weekly SEO recapThis is a week of quite a bit of newsGoogle pushed a new standard called Accelerated Mobile Pages and an update to prevent hacked sites from ranking in the search results. Let’s dive in:

Accelerated Mobile Pages

The biggest news of the week is Google’s push for a new web standard they’ve developed together with a ton of (mostly European) publishers and some other parties. It’s called Accelerated Mobile Pages (AMP) and it’s supposed to be a new and open web standard.

Compare these two screenshots from the Guardian:

guardian-amp guardian-normal

Left is the AMP version, right the normal HTML version.

I have two problems with it:

  1. It restricts what we can do on the web.
  2. It’s not open at all, but benefits a select group of larger web companies.

Restricting the web

The basic idea of AMP is that they’ve modified HTML to restrict it quite a bit. A lot of the functionality we can offer on web pages today won’t be allowed within AMP pages, which makes making it faster quite easy. Let’s compare this to a race car. If you want to make a race car faster, you give it a faster engine and you strip all the weight. In this weight stripping you also remove things like back seats, air conditioning, etc. AMP is not unlike that. It’s the trimmed down version of a normal web, because Google cares for speed more than for nifty features.

I’ve worked on CSS3 a lot, starting CSS3.info back in 2006. Ironically, AMP removes some of the CSS selectors that were introduced back then. AMP basically brings us back to an internet from before 2000. AMP throws away years of advancement, with the only goal being to make the web faster. I like fast, but I like features more. There’s a reason most of us ride in cars with air conditioning, back seats, GPS etc. We like these features. I can’t see this as an improvement.

Not an open standard

Some of the things we can currently do on the web that you’d expect to be restricted in AMP are not, which is where I got worried. Some companies get to have their own tags with their own specific functionality, but it’s unclear whether everyone can get those. There are, for instance, specific tags for YouTube and Twitter. To get your tag in AMP you’ll have to apply to the people that lead its development. The same is true for most advertising formats: only 5 ad platforms are supported, 2 of which are owned by Google.

Currently there is no info to be found on the AMP project site about how the process of applying for new tags or ad formats, or other things, will work. The site just has a form with no information on who you’re submitting info to. It doesn’t feel “open”, it feels very closed.

Right now, AMP seems to be far from an open standard. It’s a standard devised by Google, which was smart enough to allow a few competitors access to not be hit by court cases immediately.

An anti-spam update

Other news this week was that Google rolled out an update to minimize the number of hacked sites showing in the search results. They’re calling it an algorithmic update, yet, to be honest, most of what I’m seeing suggests that they actually just flagged thousands if not more sites as spam. Some of the most spammed for keywords had their entire top 20 change, but within 2 days the entire top 20 was filled back up with hacked sites, just relatively new ones.

What it does show is that you should really make sure your site doesn’t get hacked. This article on WordPress security might be a good start if you’re on WordPress.

That’s it, see you next week!

joost signature

October 10th 2015 spam