Pending Legislation Could Make ISPs Liable for Financial Fraud

Rebecca Schoff, Chilling Effects Clearinghouse, November 06, 2009

Abstract: John Timmer over at Ars Technica has reported that a bill introduced in Congress last month would make Internet service providers liable if a particular kind of financial fraud is perpetrated on their networks.

The bill, HR 3817, proposes a specific extension of ISP liability: it would apply in cases where someone using the ISP's network misrepresents himself as a member of the Securities Investor Protection Corporation, a federal agency that aids investors when their brokerage firm fails or when their assets are stolen by a broker. In order to be held liable for damages, the ISP would also have to be aware that the information on their servers or network was fraudulent in this way, or take no action to prevent access after having been informed of the misrepresentation.

Timmer points out two concerns, the first is a "lack of clarity about how [these sanctions] might be implemented," since the bill doesn't provide for any notice or takedown process analogous to the DMCA's process. Ultimately, Timmer comments, "it's a bit disturbing to see that the first response to fraudulent content on the Internet is an attempt to force the ISPs to police the content they transmit."

The bill is still in the early stages and these provisions are just a small part of it, but it seems clear that this is legislation worth watching.

Here's a link to the Jurist article covering the bill's approval by the House Financial Services Committee. That article includes a link to the full text of the bill and a record of its progress through Congress on Congress's Thomas database.

Chilling Effects Clearinghouse - www.chillingeffects.org

Chilling Effects Clearinghouse page printed from: https://www.chillingeffects.org/weather.cgi?WeatherID=619