The Lawletter Vol 36 No 7
Maintaining a website has become a matter of business necessity for most professional, commercial, and retail establishments. Despite its undisputed advantages, however, the operation of a website also presents new areas of exposure to liability for its owner or operator. Fifty percent of businesses now report experiencing between one and five cyber risk incidents, and several recent high‑profile cases have significantly increased interest in a new form of insurance: Cyber Liability Insurance. This type of insurance is designed primarily to protect businesses from liability arising from the ownership or operation of a website. Sources of potential liability include infringement, privacy, defamation, reliance, or accessibility.
In addition to these sources of liability, a recent case involving a popular social media website demonstrates that there are other potential sources of liability for operating a website. In late 2011, Match.com settled a lawsuit filed by a victim of sexual assault and agreed to screen its members against state and national sex offender registries. See Doe v. Match.com (Cal. Super. Ct. filed Apr. 13, 2011).
Although the potential for liability is not in dispute, there is some debate about the degree of care a social media site must exercise. Some experts believe that the accessibility of sex offender registries will create a duty on the part of other sites to screen users, while other experts believe that Match.com made a mistake in agreeing to screen users and that the screening itself may give rise to liability. Nevertheless, eHarmony and Zoosk have since indicated that they, too, would be enhancing security for members and screening for sex offenders.
Although this Match.com lawsuit did not establish any legal precedent, it does underscore the trend toward increasing recognition of website liability. On the other hand, it may be the case that Match.com unnecessarily exposed itself to liability for the voluntary screening. Should a sex offender make it through the screening process and cause injury to another user, it could be significantly more difficult for Match.com to argue in a subsequent lawsuit that it does not have a duty to screen for not only sex offenders but other potentially dangerous users as well. Thus, the case has significance beyond the social media context, in that it demonstrates the difficulty website operators face in establishing policies calculated to reduce liability.
The Match.com lawsuit was preceded by two earlier actions asserting more conventional bases for liability. In Nat'l Fed'n of the Blind v. Target Corp., 582 F. Supp. 2d 1185 (N.D. Cal. 2007), a lawsuit was brought against Target Corporation, based on the retailer's failure to make its website accessible to blind persons by including coding that would make the website compatible with screen‑reading software that vocalizes text and describes graphics. After several years of litigation, Target agreed to modify its website for blind users and to pay $6 million into a settlement fund that would be used to pay valid claims submitted by members of the California subclass. See also In re Nations Title Agency, Inc., No. 052‑3117, 2006 WL 1367834 (FTC May 10, 2006) (despite having assured consumers that it maintained "physical, electronic, and procedural safeguards" to protect their personal information, real estate title company nonetheless discarded unshredded consumer home loan applications into open trash dumpster, for which it faced FTC charges of inadequate storage and disposal procedures for sensitive consumer information; charges ultimately settled for undisclosed amount).
[The attorneys of the National Legal Research Group have prepared a White Paper that analyzes the many potential sources of website liability and shows owners/operators of websites how they can avoid liability. This White Paper includes actual examples of how some website owners/operators have been exposed to liability and how others have avoided liability. We have also prepared a White Paper addressing the special problems involved in law firm websites, including compliance with ethics and lawyer advertising rules. If you or your clients operate a website, you need to be aware of the legal implications. These White Papers gather together the information that you and your clients need to cover all the bases. To order, click here and select either Employer and Law Firm Website LiabilityCLaw Office Edition or Employer and Law Firm LiabilityCStandard Edition. You may also call our toll-free number, 1‑800‑727‑6574, to order.]