Facebook ordered to monitor and remove fraudulent advertisements
Bitcoin ads featuring John de Mol are unlawful
Facebook has been ordered by the Amsterdam court to take effective measures in order to prevent certain scam advertisements regarding Bitcoin software from being published on its network. The case was brought by Dutch media mogul John de Mol, who had got tired of having his name and photograph associated with the fraudulent ads. Facebook is facing a penalty of € 10,000 for each day an ad for Bitcoins or other cryptocurrencies featuring Mr De Mol is published on its network. In addition, Facebook has been ordered to provide the claimant with user and bank details of the party publishing the adverts.
The ads, which started to appear on Facebook and other social media networks over a year ago, feature a photograph of Mr De Mol seemingly promoting a company which claims to generate enormous profits in the cryptocurrency trading. Potential customers are enticed with texts such as “Dutch billionaire John de Mol is about to release his Bitcoin software to the public. People get rich within days!”. Upon clicking the ad and investing money, customers end up empty-handed. Similar ads featuring other prominent Dutch people, including Eurovision Song Contest winner Duncan Laurence, have popped up on Facebook as well. British journalist Martin Lewis is also a victim of this phenomenon.
Mr De Mol argued before the court that Facebook acted unlawfully towards him by allowing the adverts to appear, even though these are clearly against Facebook’s own advertising policy, which explicitly prohibits the promotion of deceiving or illegal practices, as well as breaches of personal rights. Facebook defended itself by stating that a) it is a merely a neutral hosting provider as referred to in article 14 paragraph 1 of the Directive on electronic commerce, b) awarding the claim would result in a general monitoring obligation, which is not allowed under this directive, and c) it would be technically impossible to implement the requested measures.
The court was not very receptive to Facebook’s first argument, taking into consideration that its revenue model is primarily based on selling adverts. The company actively controls who may use its advertising platform and which adverts are allowed to appear on its pages, by means of the aforementioned policy. The fact that this process is largely automated, as argued by Facebook, does not make a difference: the automated process is ultimately controlled by the company.
Facebook’s second defence also failed: although recital 47 of the Directive on electronic commerce prohibits general monitoring obligations, monitoring obligations in specific cases are explicitly exempted from this principle. As the measure requested by Mr De Mol only pertains to the removal of ads containing his name or image, the court found the obligation sufficiently specific. Facebook also argued that any obligation would be an unlawful limitation of its freedom of expression and its freedom to conduct a business. The court however found the freedom of expression not to be at risk, as the measure would solely concern commercial communication. It agreed that the freedom to conduct a business would be limited, but found this justified considering the limited scope of the measure.
The court finally rejected Facebook’s third argument. It appreciated that it may be difficult to prevent all fraudulent adverts featuring De Mol from appearing, but that does not mean that Facebook cannot be obliged to do everything within its power to observe the court order. Facebook was thus ordered to cease its unlawful acts against De Mol, which means that it must prevent adverts, related to Bitcoin or other cryptocurrencies, featuring De Mol’s name or image from appearing on its pages.
Following the Amsterdam court’s judgment, other celebrities have made public that they will sue Facebook on similar grounds. Even foreign victims of this fraud could possibly instigate proceedings against the social media network in the Netherlands, as the Dutch courts would be competent to hear such a case if, for example, the adverts are (also) aimed at Dutch Facebook users. Meanwhile, Facebook has announced that it considers to bring an appeal against the judgment with the Amsterdam court of appeal.