UPDATE:  Last month, the First Circuit affirmed the dismissal of the action, holding that there was no language in Homeaway’s “Basic Rental Guarantee” that makes any representation or warranty that Homeaway pre-screened listings before they were posted, as the document, at that time, simply established a process for obtaining a refund of up to $1000 (subject to certain conditions). (Hiam v. HomeAway.com, Inc., No. 17-1898 (1st Cir. Apr. 12, 2018)).  Beyond examining the Guarantee, the court followed the lower court’s reasoning that focused on HomeAway’s business-specific terms and conditions, which expressly notified users that listings are not pre-screened (“[W]e have no duty to pre-screen content posted on the Site by members, travelers or other users”).  With dismissal based upon the language of HomeAway’s Guarantee and site terms, the appeals court declined to opine on whether the dismissal was also justified on CDA Section 230 grounds.

In a resounding victory for well-drafted terms and conditions and robust immunity under Section 230 of the Communications Decency Act, 47 U.S.C. § 230 (“CDA Section 230”), a Massachusetts district court granted summary judgment in favor of HomeAway, the online vacation rental marketplace, on two users’ claims stemming from a dispute over a property listing on the VRBO.com site. (Hiam v. HomeAway.com, Inc., No. 16-10360 (D. Mass. July 27, 2017)).   In its opinion, the court not only held that CDA Section 230 bars HomeAway from being treated as a “seller of travel services” under state consumer protection regulations, but also that HomeAway’s terms and conditions and privacy policy expressly disavowed any promises to pre-screen or monitor rental listings or release member information upon a user’s request.

This decision underscores the importance for e-commerce platforms to draft unambiguous terms of use that outline what is the role of the platform in transactions conducted through it, what promises, if any, the platform makes with regard to the accuracy of user-generated content, and how it will work to resolve disputes over listings or other user-generated content.

In Hiam, the plaintiffs reserved a rental property located in Belize on VRBO.com and thereafter wired two payments to the property manager according to emailed directions.  When they couldn’t reach the property manager to confirm the reservation, the plaintiffs contacted HomeAway to express concerns that the listing was fraudulent.  After conducting an investigation, HomeAway responded that the listing did not meet their definition of fraud because the owner was a real person who had hosted previous stays; the site also declined, due to privacy concerns, to release the name of the property owner upon plaintiffs’ request.  Eventually, someone connected to the rental listing contacted the plaintiffs stating the property was no longer available and arranged for alternative accommodations.  Upon their return, plaintiffs brought Massachusetts and Colorado state law claims against HomeAway for alleged monetary losses.

Because the plaintiffs realized that pursuant to CDA Section 230, HomeAway could not be found liable for the content of any third-party vacation rental listings on the site or any HomeAway editorial decisions about how to treat such content, the plaintiffs attempted to predicate their claims on the language of HomeAway’s own content (e.g., terms and conditions, privacy policy), asserting a host of claims, including that: (1) HomeAway violated certain consumer protection regulations that pertain to “sellers of travel services”; (2) the website promised to pre-screen each property rental posting; and (3) the site would disclose member information and payment arrangements upon request.  The court granted summary judgment in favor of HomeAway as to all counts of the plaintiffs’ complaint.

In dismissing the claims, the court ruled that HomeAway is not a “seller of travel services” under Massachusetts law because it merely provides a platform for others to sell or provide lodging, but does not provide actual facilities.  Alternatively, even assuming HomeAway was a “seller of travel services” subject to state regulation in that area, the court found that CDA Section 230 would bar this claim as it would attempt to hold HomeAway liable for property listings created by a third-party content provider.

The court also rejected the plaintiffs’ contention that HomeAway’s “Basic Rental Guarantee,” which provided a process to reimburse qualified users for losses due to internet fraud, amounted to a promise to verify listings.  Instead, the court ruled that the Guarantee merely provided specified retroactive protection against internet fraud as defined by HomeAway and could not be read to imply a duty to pre-screen postings or verify their accuracy.   Furthermore, the court found that HomeAway’s own terms expressly disclaimed the accuracy of third-party listings and exhorted travelers to communicate directly with property owners:

“We have no duty to pre-screen content posted on the Site by members, travelers or other users . . . . All property listings on the Site are the sole responsibility of the member . . . and we specifically disclaim any and all liability arising from the alleged accuracy of the listings….”

“We encourage you to communicate directly with a traveler or member through the tools available on the Site, though even this does not assure you of the identity of the person with which you are communicating.  We further encourage you to take other reasonable measures to assure yourself of the other person’s identity and, for travelers, of the property and relevant details of your booking or proposed booking.”

Lastly, the court ruled that HomeAway’s privacy policy did not require HomeAway to disclose upon request the private contact information and payment arrangements of those who post listings.  According to its privacy policy, HomeAway may share user information “to enforce [its] policies, or where [it is] permitted to do so by applicable law, such as in response to a request by a law enforcement or governmental authority, or in connection with actual or proposed litigation . . . .”  The court rejected plaintiffs’ claims that HomeAway’s refusal to share information on a member violated the language of its privacy policy and was a deceptive practice, concluding that the provision in question makes no implied or express promise that HomeAway will disclose user information and that it was “within HomeAway’s complete discretion whether — if ever — it will share personal data.”

The court’s decision in Hiam highlights why online services and marketplaces often take great care in drafting terms of use and privacy policies.  Any popular platform or app might process thousands or even millions of transactions and it is inevitable that an isolated issue will arise due to a questionable third-party posting or unscrupulous user.  Thus, site owners invariably rely on disclaimers, limitations of liability, privacy promises, and language surrounding any guarantees or discretion to investigate complaints to spell out clearly the specified practices of the particular platform.

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Photo of Jeffrey Neuburger Jeffrey Neuburger

Jeffrey Neuburger is co-head of Proskauer’s Technology, Media & Telecommunications Group, head of the Firm’s Blockchain Group and a member of the Firm’s Privacy & Cybersecurity Group.

Jeff’s practice focuses on technology, media and intellectual property-related transactions, counseling and dispute resolution. That expertise…

Jeffrey Neuburger is co-head of Proskauer’s Technology, Media & Telecommunications Group, head of the Firm’s Blockchain Group and a member of the Firm’s Privacy & Cybersecurity Group.

Jeff’s practice focuses on technology, media and intellectual property-related transactions, counseling and dispute resolution. That expertise, combined with his professional experience at General Electric and academic experience in computer science, makes him a leader in the field.

As one of the architects of the technology law discipline, Jeff continues to lead on a range of business-critical transactions involving the use of emerging technology and distribution methods. For example, Jeff has become one of the foremost private practice lawyers in the country for the implementation of blockchain-based technology solutions, helping clients in a wide variety of industries capture the business opportunities presented by the rapid evolution of blockchain. He is a member of the New York State Bar Association’s Task Force on Emerging Digital Finance and Currency.

Jeff counsels on a variety of e-commerce, social media and advertising matters; represents many organizations in large infrastructure-related projects, such as outsourcing, technology acquisitions, cloud computing initiatives and related services agreements; advises on the implementation of biometric technology; and represents clients on a wide range of data aggregation, privacy and data security matters. In addition, Jeff assists clients on a wide range of issues related to intellectual property and publishing matters in the context of both technology-based applications and traditional media.