ConsumerAffairs is linked to new Supreme Court Internet freedom cases. Here’s how.

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Meet the fighter who bet this company to save user-generated content like yours

In late February 2024, the U.S. Supreme Court heard two cases in which web giants from Facebook to Reddit to TikTok are fighting to retain their freedom to pull down user posts they believe shouldn’t see the light of day. 

At stake in the court’s decision, expected in June, is the future of social media and user-generated content, including consumer reviews. 

James R. Hood finds the moment a little surreal. Fifteen years ago, the founder of ConsumerAffairs battled in court for the freedom to NOT pull down user-generated content—in his case, posts written by wronged consumers that powerful foes were trying to squash. 

Hood’s landmark win at the Court of Appeals in Nemet Chevrolet vs. Inc. paved the way for years of Internet freedom that should not be taken for granted.  

“Without the Nemet case law,” said Zac Carman, the current CEO of ConsumerAffairs, “the Internet would not have user-generated content and there would not be social networks as we know them.”

Now Hood is angry that the state governments of Florida and Texas want to reverse the precedent, limiting websites’ editorial control of user-generated content that he risked his livelihood and ConsumerAffairs to win.

“Although I’m no longer involved with ConsumerAffairs,” said the longtime journalist, news executive and entrepreneur, “it’s a daily dose of pleasure for me to see that it and other consumer sites continue working on behalf of consumers without fear of censorship or interference.”

Speaking truth to power  

ConsumerAffairs’s fight in 2009 was to stop businesses from bullying websites into silence with lawsuits. While the law appeared to be on his side, in harsh reality Hood almost had to shut down his company in the legal struggle. 

At the dawn of the World Wide Web, Congress passed the Communications Decency Act of 1996 with 26 words in Section 230 that seemed to confirm user comments as protected speech. Section 230 declared that Internet sites, in Hood’s paraphrase, “could not be held liable for what third parties posted, much as the phone company can’t be held responsible for what people say on the phone.”

The law had never received a legal challenge by the time Hood first began allowing consumers to post reviews—many of them negative—about the products or services they had received. Those in-depth user accounts became in 1998, essential reading for alert consumers.

The complication, Hood discovered, was that corporations took strong exception to critical user accounts and comments, and also to his follow-up reporting. 

ConsumerAffairs served as one of the first product safety alerts. “Prior to the Internet,” Hood said, “you would not know that an F-150 truck burned up in Maine one day and in Oklahoma a week later. There was just no way to pull that information together. And that's what our site was doing. We accidentally invented something.” 

“Businesses were aghast, angry and aggrieved,” Hood said, when he wouldn’t pull down posts they didn’t like. “They hired lawyers to sue us and hackers to attack us.”

Years of lawsuits and tension came to a head when a New York car dealer sued ConsumerAffairs over a customer review that it claimed was libelous. 

“He was a small car dealer, but I poked around and saw he had some high-powered legal help that also represented a certain national association of car dealers,” said Hood, who ultimately steered ConsumerAffairs through six or seven lawsuits but would never forget this one.  “I told my good local law firm here in Virginia, ‘I think we're in trouble here. They're mad and they’re not going to go away.’

“The case was subterfuge to try to shut us down basically—to drag it out and see if they can bankrupt us,” he said.

Nemet Chevrolet vs. Inc.

Eventually, after grueling months of depositions, a key ruling in his favor, and then Nemet Chevrolet’s appeal, the case wound its way to the Fourth Circuit Court of Appeals in Richmond, one step below the Supreme Court. The mainstream media wasn’t paying much attention, but those in publishing and First Amendment circles were. So were Internet entrepreneurs who were in the midst of a social media Gold Rush.

“This case resulted in a lot of nail-biting in the digital world,” Hood said. “If we had lost, it could have invalidated 230 and left websites vulnerable to lawsuits from just about anyone who objected to just about anything.”

His own nails were also suffering. He was the owner and CEO. “It takes big bucks to get a case that far through the system,” he said. “That case nearly bankrupted us, the company and me. That was about the time my spouse and I said, ‘We’ve got to get serious about selling this company.’” 

The arguments in 2009 before the Fourth Circuit will sound familiar to anyone who has followed the Supreme Court’s current cases. “Nemet argued that we had edited and categorized complaints from its customers, thereby making our reviews ‘content creation,’ as opposed to a simple conduit where consumers could vent,” Hood said.

Meanwhile, ConsumerAffairs cited Section 230 as its defense, noting the law said Internet sites could not be held liable for what third parties posted. The 1996 law was about to get its first legal challenge.

The justices ruled in favor of ConsumerAffairs, saying the car dealer hadn’t made any “cognizable argument” that the ConsumerAffairs practice of contacting a reviewer to ask a question amounted to content “creation.” (It’s still our practice to contact customers to ask them questions about a company.)

“Assuming it to be true that contacted the consumers to ask some unknown question,” the justices wrote, “this bare allegation proves nothing as to Nemet's claim is an information content provider.”

The legal win, Hood recalled, helped entrench Section 230 as “settled law.” It also immunized ConsumerAffairs and presumably other sites fueled by user content against future nuisance suits.

 “When angry businesses pressed their lawyers to sue us, the attorneys would do a quick look and advise that suing ConsumerAffairs was a losing proposition. We had the law on our side,” Hood said.

Then and now

Hood sold the company to current CEO Zac Carman in 2010 but remained as editor–in–chief until he retired in 2017, as the digital world rapidly changed. Social media became embroiled in controversy over which posts it would allow but didn’t have to fear defamation lawsuits.

Corporations went from being largely indifferent about the “consumer experience” to blasting out customer service surveys after any and every transaction.

That brings us to the cases currently before the Supreme Court, which Hood says have an Alice in Wonderland quality about them.

New state laws in Texas and Florida want to reverse the now-established precedent on the grounds that content moderation can equal censorship. The new laws permit the government or lawsuits to force sites to carry content they don’t want to. 

Are those laws constitutional? That is what the U.S. Supreme Court is considering. 

Hood believes the framers would frown at the new laws as government censorship, only in reverse. While Americans have the right to free speech, he said, they don’t have the right of access to a site owned by a private company.

“The framers left no doubt that publishers should be free to publish without interference from the government, leaving it up to the citizenry to read all sides and make their own decisions,” Hood said.

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