Private Censorship-Fighting Suppression of Speech by Non-Governmental Actors

By: Lawrence G. Walters, Esq.

www.FirstAmendment.xxx

Government censorship in the Internet age has been a consistent focal point for free speech advocates. Recent examples of censorship by the American government can be egregious, including the curtailment of First Amendment rights through mass surveillance, overregulation of disfavored speech, criminal prosecution, and outright bans on books, movies, and websites. However, the First Amendment has always provided a potential legal recourse through the judicial system in cases of illegal government censorship. What happens, however, when censorship occurs not at the hands of a government actor, but through the application of policies imposed by powerful, private persons or corporations? What recourse is available in the case of “private censorship”?

Scout Willis, the daughter of actors Bruce Willis and Demi Moore, recently received substantial press coverage when she walked topless through the streets of New York City in an effort to bring attention to Instagram’s censorship of women’s nipples. Willis used the hashtag #FreetheNipple as part of her Twitter-based protest of Instagram’s policies. The hashtag, as well as an upcoming film of the same name, is the brainchild of filmmaker Lina Esco. The photo- sharing social media website has imposed a policy of censoring not only images that it deems inappropriate, but offensive hashtags as well. For example, Singer Rihanna has been on the receiving end of Instagram’s censorship policies and has had her account suspended for nudity. Instagram later entirely disabled the account, but claimed it was a mistake made by one of their “automated systems.”

Instagram isn’t the only social network under fire for its censorship policies: Facebook has routinely incensed users with its censorship of not only images of breastfeeding, but political posts and pages, as well.

The banking and financial sector routinely delivers its own potent dose of “private censorship” as well. In recent months, adult film stars have reported having their bank accounts systematically closed by JP Morgan Chase, for no other reason than their connection with adult entertainment. This flavor of private censorship however, may be more insidious than it first appeared. Imposing censorship through denial of banking services may actually have been motived by the U.S. Department of Justice, which created a leaked program dubbed “Operation Choke Point,” designed to pressure banks into denying service to certain disfavored industries.

Payment processors PayPal and WePay have also been known to shut down accounts of bloggers involved in the adult entertainment industry. Visa and MasterCard have historically imposed higher standards for adult websites for payment processing as well, including higher-than-normal transaction fees, penalties, and charge-back rates. American Express categorically prohibits its cards to be used for things like adult websites or WikiLeaks donations. Content restrictions imposed on adult websites by merchant banks and processors are well-known to the site operators, although the rules are rarely made public, and can change without notice. Credit card companies are under increasing pressure to become the Internet’s content police, and some have recently given in to pressure to stop processing payments for “mugshot” removal websites.

Even Google; one of the most vocal crusaders for Internet freedom, appears to have hopped aboard the “private censorship” bandwagon, at least in terms of the parts of the Internet it deems “offensive.” Google has lately made waves for prohibiting adult material on its powerful advertising network; AdWords. Although Google claims the policies are not new, many in the adult industry disagree. There has been much speculation that pressure from conservative groups, especially Morality in Media, caused Google’s sudden crackdown on adult advertisements. Although Google has refused to confirm the connection, this alleged kowtowing to a family values group would be shocking from the search engine giant, which previously claimed it was strongly committed to free expression. Additionally, it has been reported that Google has pushed adult content down in its organic search results, and even allows the first page of results for adult-oriented search terms to be dominated by less relevant, non-adult links.

These instances of private censorship, and many like them, are not subject to First Amendment protection since they are undertaken at the behest of corporate directors, and not governmental agencies. But the results can often be even more devastating. With no constitutional restrictions to rein them in, giant, multi-billion dollar companies end up making critical decisions on what content the general public can see, read, and hear – especially online. The corporations making these decisions are now more powerful than most countries – at least when it comes to being the gatekeepers of communication. The censorial power wielded by social networking platforms like Twitter and Facebook is readily confirmed by the knee-jerk reaction by governments under national revolt to immediately shut them down, although the effort is not always successful.

If the government is involved with, or encourages censorship by private parties, such as with Operation Choke Hold, legal remedies may be available under federal civil rights conspiracy laws. However, members of the general public are often confused about where their constitutional First Amendment rights end and where unrestrained “private censorship” begins. Part of this confusion may result from the ability to invoke the First Amendment defenses against defamation claims involving purely private parties. Some “SLAPP suit” statutes, again governing private disputes, are also grounded in First Amendment principles, thus adding to the confusion. However, these are narrow exceptions to the general rule that prevents individuals from relying on First Amendment rights when they are censored by private entities. Powerful online media entities like Google, Facebook and Twitter can, and do, routinely censor speech that they find offensive or which violates their acceptable use polices. Application of these policies may be arbitrary, inconsistent, or even discriminatory. But for now, the actions remain legal and constitutional.

The good news is that overly-restrictive policies by private entities create opportunities for others who are willing to permit the activity, or take some risk. Notably, when virtual monopolies begin to develop, such as the Visa/MasterCard merchant banking system, Google’s search engine rankings and ad policies, or Facebook/Twitter social networking platforms, dissenters are often left with few alternatives. However, the consumer’s voice still matters. Upstarts like KIK messenger, or Tumblr photo sharing system, are often created to fill the void created by restrictive policies implemented by larger competitors. Even the once invincible merchant banking system is sweating bullets as consumers take to virtual currencies like BitCoin to make purchases that might otherwise be unavailable due to policies imposed by conglomerate financial institutions. The Internet, it seems, remains quite adept at routing around censorship – even the private kind.

So what’s the public’s answer to the growing problem of private censorship? Many have struggled with this very question, and thus far, no perfect solution has been proposed. Imposing First Amendment restraints on private businesses would be antithetical to America’s capitalist, free-market system, and could lead to greater problems than it solves. With a growing number of companies willing to deviate from the conservative policies of their perhaps larger and more established competitors, consumers have become empowered to choose services that share their views on freedom of expression. Some of those consumers will go on to form their own businesses, mobile applications, websites – even currencies – that serve the online users who were flippantly discarded by their predecessors. For now, the best and likely most effective response to private censorship is to “vote with your dollars, and do business with like-minded online service providers.

Lawrence G. Walters, Esq., is a First Amendment attorney, and operator of the Walters Law Group; www.FirstAmendment.com. He has practiced law for over 25 years, and is a vocal advocate for free speech rights. Mr. Walters is the past president and National Chairman of the First Amendment Lawyers Association, and a widely-published author on issues involving censorship and the First Amendment. More information about the firm’s advocacy on behalf of the adult entertainment industry can be found at www.FirstAmendment.xxx

Censored by Google: What’s Next?

Google, a name most associated with the popular, gargantuan search engine, has been making its way into the headlines for a different and much more egregious reason: censorship across its platform of products. The company recently made waves for prohibiting adult material on its advertising network, AdWords. Now, it seems, Google has expanded its censorial policies and many are wondering just where the company will stop.

Xbiz.com founder and editor, Alec Helmy, called out the search giant for its hypocritical behavior; echoing the concerns of many in the adult industry. In an open letter, Helmy wrote, “Your decision has left countless businesses in dismay, bewildered about why an ultra- progressive company that is so committed to ‘Freedom of Express’ would make such a decision. These same companies also remain concerned about what the future may hold – specifically, whether you will also decide to place adult oriented websites at a decided disadvantage in organic search results.”

Through a spokesperson, Google claims its restrictive policies on adult advertisements are not new. However, many familiar with Google and the adult industry do not agree. Theo Sapoutzis, chairman and CEO of AVN Media Network, said he was surprised by the move: “I was one of the very first advertisers for AdWords back in 2002. It’s something that’s been [untouched] for 12 years, so you don’t expect change is going to start happening.”

Tom Hymes, senior editor at AVN, agrees, noting that many in the adult industry have been abiding by Google’s rules for years and are now being abandoned by the search giant: “There are many people who say the biggest losers are the ones who play by the rules. The winners are the huge properties with a lot of free content and frequent updates – the type of actions the Google algorithms really like.” BaDoink CEO, Todd Gilder, added to the chorus with a scathing open letter to Google, noting: “

Now, Google is taking its censorship on advertisements a step further and directing business users to cover up “sexually explicit content” in the form of album covers. The search giant has instructed music website Drowned in Sound (DiS) to pixelate, thereby censoring explicit cover art. Sean Adams, founder of DiS said that “it seems crazy that they feel they can police our editorial.” He also wondered just far Google would go with its censorship policies in the future. Just recently, Google surprised many users when it removed several thousand links in an effort to comply with the EU’s “right to be forgotten” law.

Adams is certainly not alone in questioning the lengths and depths of the company’s censorship. Many people, both in and out of the adult industry, are uncomfortable with Google’s recent decisions and wonder what will come next. Attorney Michael Fattorosi stated, “This is

When an organization as visionary, powerful and dominant as Google

starts kowtowing to shrewd, faith-based special interest groups with federal lobbyists like Patrick

A. Trueman at the helm, it’s a sad day for freedom and a sad day for IT.”

another example of a mainstream company turning its back on the industry that has supported it. The question now becomes: Will they block adult content from their search results?”

Google has also previously attempted to keep adult content out of other major products: developers are not permitted to share Google Glass apps with sexually explicit content and sexually explicit materials are banned from Chromecast.

Many are speculating that pressure from conservative groups caused Google’s policy changes regarding adult content. Morality in Media, an ultra-conservative media activist group, claimed through a press release that Google’s policy changes came after a “productive meeting” between the two. Google has refused to confirm the connection. If accurate, this kowtowing to a family values group is a first for the search engine giant, which previously prided itself on commitment to free expression principles.

David Holmes, writing for Pando Daily, explains the greater problem of Google’s censorship and its impact beyond the adult industry. Holmes writes:

You may despise pornography, but the specter of “family values” has often been used to attack anything that threatens traditional Christian morality, from homosexuality to books about wizards. I doubt Google will ban Out Magazine or Harry Pottery anytime soon, but what about links to, say, a provocative work of art like Piss Christ? Or ads for birth control?

As Holmes notes, the importance of tracking Google’s policy changes is not only for their impact on industries currently hurt by the new rules, but also their potential to censor information Google doesn’t agree with in the future. Holmes colleague, Mark Ames, makes an important point: “Never in history has one corporation and one source had so much power over what we know and don’t know.”

Google’s power to filter the information received by the public is vast, and its ability censor disfavored speech, dangerous. Most importantly, this is everyone’s issue, not the select few whom Google has decided to target today.

Keeping Your Records Clean -Segregating 2257 Records under Federal Law

By: Lawrence G. Walters, Esq.

Walters Law Group

Performer ID’s? Check. 2257 form? Check. Model release? Check. Throw them all into a file or load them into a database and your legal tail is covered, right? Unfortunately, XXX law is never that simple, particularly when discussing compliance with federal regulations as applied to a highly regulated industry like adult entertainment.

One of the most common mistakes our firm has seen over the years with section 2257 compliance is the inclusion of extraneous records in the 2257 file or database. The biggest offender always seems to be the model release, which is often kept alongside the 2257 form related to an individual performer. Logic would dictate that this is the proper procedure, and that all legal documentation associated with a performer should be maintained in the same place, at the risk of getting lost if separated. But alas, logic does not always inform obligations imposed by a federal statute. The applicable statutory provision appears in 28 C.F.R. § 75.2(e) which states:

Records required to be maintained under this part shall be segregated from all other records, shall not contain other records, and shall not be contained within any other records.

Seems pretty clear, right? But even well-known adult entertainment lawyers have become confused on occasion, and recommend including information or other evidence in a performer’s 2257 file beyond the specific categories of material required by the statute (e.g. “dress size, phone number,” handwriting sample, etc.). The specific items that should be contained in any producer’s 2257 files and/or database, is beyond the scope of this article, and more importantly, the subject of retained legal advice. However, given the clear dictates of federal law, commonly obtained documents such as model releases, payment/compensation information, or evidence of sobriety have no place in a 2257 file. Such information could certainly be kept separately to help defend against later claims by models seeking to remove their content, but never included in a 2257 record. But any recommendation regarding keeping such information in a 2257 file is simply dangerous.

Why would the Department of Justice require this segregation of 2257 records from other performer records? Was that provision included just to make compliance more difficult and catch producers in technical violations? Although, one’s inner conspiracy theorist cannot immediately dismiss such questions – particularly when a controversial issue such as adult entertainment is the subject of the regulation- the real answer is probably less incendiary and much more practical. The fact of the matter is that FBI inspectors simply do not want to sift through mounds of irrelevant business documentation to find the federally mandated information that is pertinent to their investigation. The 2257 inspections that have occurred thus far, typically involved the use of a device to copy the relevant files and/or database in order to facilitate the inspection process and avoid unnecessary governmental review of proprietary business information. Segregating the records into a single physical or electronic file allows for easy copying and examination by authorized federal agents, without permitting review of extraneous and possibly confidential business information

Section 2257 is not the only federal statute that requires some form of records segregation. For example, federal drug regulations mandate that medical professionals and researchers authorized to handle controlled substances, must keep separate records pertaining to such substances. Various portions of HIPAA, specifically those pertaining to the privacy regulations of the Americans with Disabilities Act and the Family & Medical Leave Act, require that employers maintain employee medical records in separate files as well. Similarly, even psychotherapy notes and such related information must be segregated from other records under HIPAA privacy rules.

Some of the separation requirements are based on privacy concerns, such as those applicable to medical records, while others are focused on easing the burdens on inspectors (i.e., § 2257 and the controlled substances regulations). Whatever the justification, it is clear that section 2257 requires that only the specific items required by the statute be included in the 2257 file/database. Unfortunately, before the adoption of this particular regulation in 2008 (effective in 2009), many 2257 forms circulated by XXX lawyers were included in, or comprised the first page of, the performer’s model release. Often, only one signature was obtained for both the model release and 2257 form. While this practice was certainly easier on the content producers and helped prevent inadvertent loss or misplacement of portions of a model’s legal documentation, this procedure is no longer permissible.

Unlike certain “grandfathering” provisions found in section 2257, such as those exempting content (created prior to March 18, 2009) depicting the “lascivious exhibition of the genitals or pubic area” of a person, the record segregation provision was effective immediately upon adoption. As a practical matter, that means content producers who were accustomed to maintaining extraneous documents (such as model releases) in their 2257 files were immediately obligated to clean out those files and separate any 2257 material from all other business records pertaining to the performer. Often this meant manually creating a new 2257 form or database from the data in the combined forms circulating prior to the adoption of 28 C.F.R. § 75.2(e). While this may sound unnecessary, particularly in an era when section 2257 is not being actively enforced, violations of this regulation still carry a potential five year federal prison sentence. Certainly this would be harsh punishment for content producers who happen to mix some extraneous performer information in their 2257 file. Notably, physicians have been carried away in handcuffs for failing to properly maintain controlled substances records in the proper format; this stands to reason that practically speaking, there is no difference between the two.

The good news is that segregating your business records from your 2257 records actually benefits the producer. A federal agent has no authority – and frankly no business – poring over documents containing proprietary business information, such as compensation details, exclusivity obligations, non-compete provisions, STD test results, or any other category of information not specifically authorized for review without a warrant under section 2257. Remember, FBI agents can enter a producer’s place of business without notice and demand to inspect 2257 records under penalty of federal prosecution. Producers of erotic content need not expose their entire business files to review by federal agents without a warrant, when such is not required by section 2257. Attempting to segregate 2257 records from other documents while the federal agents are waiting to conduct an inspection is not practical, and could arouse suspicion in the minds of the investigators.

An argument can also be made that producers have an affirmative obligation to protect the performer’s privacy rights, thus triggering the need to weed out sensitive performer documents from such files. In an age where privacy rights are dwindling at a rapid pace, every effort should be undertaken by producers of erotic content to demonstrate what is known in the law as a “reasonable expectation of privacy.” Failing to keep 2257 files clean and separate from all other business documentation could result in a waiver of important constitutional rights to privacy if produced to federal agents during a 2257 inspection. Without a warrant, the government’s prying eyes must be limited to only those minimal categories of information that producers are obligated to make available under federal law.

Lawrence Walters heads up Walters Law Group, and has represented the adult industry for 25 years. Nothing in this article is intended as legal advice. Mr. Walters can be reached at larry@firstamendment.com, or 800.530.8137.

Regulating Adult Websites through Consumer Protection

By: Lawrence G. Walters, Esq.

As stories of the government’s assault on the adult industry based on obscenity prosecutions and 2257 inspections fade into legend, a new legal ‘boogieman’ may be waiting in the shadows. It is known by several names including the “FTC,” state “Consumer Protection Divisions,” or the “Better Business Bureau.” But the underlying legal issue is always the same: Protecting the unwary consumer from deceptive and unfair business practices. The new era of government regulation is here, and it is rooted not in prudish moral conservatism, but in progressive consumer protection theories.

A variety of state and federal laws prohibit adult webmasters from deceiving, cheating, or scamming consumers through their advertising practices and operating procedures. Some states, such as California, have enacted laws that encourage private attorneys to sue businesses that engage in these “unfair” practices, by dangling the carrot of attorneys’ fees awards to successful plaintiffs. See, California Business and Professions Code 17200. The trick, for adult website operators, is to decipher which business practices are considered unfair or deceptive, and to stay far away from any such activity before they are targeted for enforcement. The inherent vagueness of terms such as “unfair” can plague ethical business operators who attempt to comply with the law, while remaining competitive. Unfortunately, the adoption of questionable business practices by a few rogue operators can apply significant pressure on others in the same industry to act accordingly, or surrender all their profits to the unsavory few who are willing take some legal risk.

Enforcement of unfair business practices statutes comes in many flavors, in the adult Internet industry. One of the first tussles between the FTC and the adult website industry resulted from advertising “free” trials that were not truly free, but quickly converted into recurring, paid memberships that were difficult to cancel within the free trial window. That practice quickly ended after some push back from the FTC. Then came enforcement of CAN SPAM’s prohibitions on unsolicited email, which cost some companies substantial fines, and put others out of business. While most adult businesses and affiliates have become familiar with the requirements of CAN SPAM, and the violations dwindled over the years, many affiliates and operators still do not recognize the broad scope of CAN SPAM prohibitions, including the difficulties with obtaining express consent to receive commercial messages, and the potential applicability of certain restrictions even to communications with existing customers.

While we still see sporadic spam complaints, at the state and federal levels, the FTC appears to have moved on to other concerns, such as prohibitions on paid endorsements, customer billing “data pass,” and pre-checked negative options. If any of those terms are unfamiliar to a reader who is operating or promoting an adult website, some legal advice is in order.

Most recently, the FTC turned its attention to online dating sites, and the use of “virtual profiles.” In January, 2013, an FTC representative appeared at an online dating conference, and discussed the Agency’s growing concern with the use of false profiles by dating sites to gain customers. The speaker further outlined the potential legal consequences of continuing this business practice. Given the increasing popularity of adult dating sites, and the unsettled legal issues surrounding this marketing activity, the industry is vulnerable to potential consumer enforcement actions arising from use of virtual profiles. No governmental agency has outright banned the practice, but caution and attention to legal compliance issues should be considered when doing so.

Unfortunately, the penalties associated with any FTC violation can be substantial. Often, the Agency will seek to disgorge the net proceeds of the business found in violation, during the time frame that the offending business practice was in use. This translates into forfeiture of total gross revenue, minus refunds and chargebacks. While this penalty is not always the end result of an FTC investigation, it is always a looming concern. Personal liability is also a possibility, as a corporation does not shield decision-makers from deceptive business practices claims. The FTC can also obtain injunctive relief, and other penalties. In extreme cases, the FTC has been known to obtain court orders, taking a business offline – even before a violation has been formally proved, or notice has been given to the targeted company. See; e.g., FTC v. Pricewert, LLC: http://www.ftc.gov/news-events/press-releases/2009/06/ftc-shuts-down-notorious-rogue-internet- service-provider-3fn

Many foreign operators take comfort in their overseas corporate setup or residence and presume that this will permit them to avoid confrontation with U.S. consumer protection agencies. While lack of personal jurisdiction can always be raised as a defense by a foreign company, the courts will look at the totality of the business’s contacts with the United States, including the number of consumers, advertisers and vendors residing in this country. In many cases, the FTC has established the existence of personal jurisdiction over foreign companies, despite the offshore location and makeup of the organization.

The important point is that, regardless of location, an adult website operator is much more likely to be hit with a consumer protection complaint than they are to be prosecuted for obscenity, or have their 2257 records inspected. Many more adult businesses have been affected by FTC and related state consumer protection agency complaints in the last 10 years, than were prosecuted by the DOJ for obscenity or 2257 violations. Interestingly, several civil litigants have asserted a website’s failure to comply with Section 2257 as a defense to copyright infringement, or as an affirmative “unfair competition” claim in recent years, making Section 2257 more likely to be used as in the civil context than as a criminal enforcement tool.

Despite these trends, consumer protection issues tend to receive little attention from the industry lawyers or media. Perhaps it is the mundane nature of these issues that prevents them from rising to the forefront, as compared to animated discussions of STD outbreaks, underage performers, or leftover obscenity prosecutions. But the danger of losing all corporate revenue for a substantial period of time is enough to cause any prudent business operator to pause for a moment, and take a look at their operating and promotional procedures.

Some new consumer protection issues appear to be on the horizon, and are worth mentioning. Initially, California has recently amended its state statute relating to the mandatory contents of privacy policies on websites available in California, which now require certain disclosures in connection with “do not track” requests submitted by users. Given the vagueness of some of the terms in the new law, and the uncertainty regarding how the industry will comply, the state Attorney General’s office is expected to announce some clarifications and best practices guidelines in the coming months. However, issues relating to the adoption and implementation of privacy policies has been fertile ground for consumer protection litigation not only in the U.S., but worldwide as well. The potential inconsistencies between the way the U.S. and the E.U. treat private, online user information has led to the adoption of a voluntary U.S./E.U. certification procedure regarding international privacy policies, providing a form of ‘safe harbor’ to sites that voluntarily certify compliance with certain multi-national standards in their privacy policies. However, the certification can expire if not renewed, and the FTC recently pursued 12 companies whose certifications were not kept current, for falsely claiming valid compliance with the safe harbor status. See; http://www.ftc.gov/news-events/press-releases/2014/01/ftc-settles- twelve-companies-falsely-claiming-comply

As is evident from the above, adult website operators are facing a multitude of consumer protection issues– some of which have only begun to be noticed by the enforcement authorities. In addition to these cutting edge website operation issues, website operators remain obligated to ensure that their promotions, legal agreements, and general operating procedures do not cross over into the realm of “unfair” in the eyes of some state or federal investigator (or private lawyer). A regular review of consumer protection compliance issues is routinely undertaken by the larger adult website companies, cam sites, and dating sites. Given the increased frequency with which these claims are being asserted at the state and federal levels, widespread industry attention is warranted.

Lawrence G. Walters, Esq., heads up Walters Law Group, and has advocated for the interests of the adult entertainment industry for over 20 years. His firm has substantial experience in defending consumer protection actions at both the state and federal levels. Nothing in this article should be interpreted as legal advice. Mr. Walters can be reached at larry@firstamendment.com or 800.530.8137.