In a 38-page published opinion, the Court of Appeal for California’s Sixth Appellate District ruled on Friday that the lawsuit challenging YouTube and Google’s immunity under Section 230 of the Communications Decency Act brought by Steve Wozniak, the co-founder of Apple and renowned tech entrepreneur, and 17 victims of a “Bitcoin Giveaway” fraudulent scam, will be allowed to proceed.
As alleged in the Complaint filed by Cotchett, Pitre & McCarthy, the Bitcoin Giveaway scam uses images and video of Steve Wozniak, and other celebrities including Elon Musk and Bill Gates, to convince YouTube users that they are hosting a live Bitcoin Giveaway event and that, for a limited time, any user who sends in their cryptocurrency will receive twice as much back. When users transfer their cryptocurrency, nothing is returned. As alleged, YouTube and Google ignored repeated requests to take the scam videos down, failed to protect its users, and knowingly promoted and profited from the scam by, among other things, providing targeted advertising. The complaint alleges that Steve Wozniak’s reputation has been and continues to be harmed by the scam.
A superior court judge dismissed the complaint, stating “the Court has sympathy for the victims of this cryptocurrency scam, including Mr. Wozniak . . . But as the Court understands the current state of the law, such relief against YouTube . . . is barred” under Section 230.
The Court of Appeal reversed, finding that plaintiffs adequately alleged that YouTube is responsible for the information it provided in its “verification badges,” which represented to users that the YouTube channels used by the fraudsters were authentic, and held that plaintiffs should be allowed to amend to allege that these verification badges materially contributed to the fraud.
Steve Wozniak said:
“YouTube, like Google, seems to rely on algorithms and no special effort requiring custom software employed quickly in these cases of criminal activity. If a crime is being committed, you MUST be able to reach humans capable of stopping it. What human would see posts like these and not ban them as criminal immediately?”
According to Joe Cotchett, one of the lawyers representing Steve Wozniak and the fraud victims:
“The Court of Appeal decision demonstrates that social media platforms like Google and YouTube need to take responsibility for their actions and they cannot use Section 230 as a total shield for their conduct. We allege that YouTube knowingly allowed the Bitcoin scam to go on for months, promoted it, and profited from it by selling targeted advertising Tens of millions of dollars in cryptocurrency have been lost in this scam which could have been prevented by YouTube.”
According to Brian Danitz, a partner at Cotchett, Pitre & McCarthy, and one of the lawyers representing Steve Wozniak and the fraud victims:
“Courts have given Section 230 immunity for social media platforms an extraordinarily broad scope. This is an important decision recognizing that there are limits to Section 230 immunity. Online platforms, like YouTube, cannot rely on blanket immunity when their own actions and speech materially contribute to the harm suffered by their users.”
According to Nanci Nishimura, another partner at Cotchett, Pitre & McCarthy, and one of the lawyers representing Steve Wozniak and the fraud victims:
“Section 230 of the Communications Decency Act has been used by social media tech companies since enactment in 1996 – as an absolute bar against fraud claims by consumers and parents for harm to their children – to make money. Finally, courts are realizing that tech companies who verify the authenticity of fraudsters apps are not immune under section 230 and can be liable – time’s up!”
Steve Wozniak and the 17 fraud victims named in the Complaint are represented by Cotchett, Pitre & McCarthy LLP in Burlingame, California.
About Cotchett, Pitre & McCarthy, LLP
Cotchett, Pitre & McCarthy, LLP engages exclusively in litigation and trials and has earned a national reputation for its dedication to prosecuting or defending socially just actions. To learn more about the firm, visit www.cpmlegal.com.
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