Ninth Circuit Affirms Injunction Against Online Check-Issuer Qchex
By Leocadie Welling – Edited by Chinh Vo
Federal Trade Commission v. Neovi, Inc., No. 09-55093 (9th Cir. May 14, 2010)
On May 14, 2010, the Ninth Circuit affirmed a grant of summary judgment in favor of the Federal Trade Commission (FTC) and an injunction granted by the Southern District of California against appellant Neovi, Inc (“Neovi”). The FTC had brought claims alleging that Neovi, through its online Qchex service, had engaged in “unfair methods of competition” by issuing unverified checks through its website. The court agreed with the FTC, finding that appellant did not take sufficient measures to prevent and address fraud. The injunction prohibits Qchex from continuing to operate without following a court-specified verification process. It further orders Qchex to disgorge its total revenues, which the district court found to be in the amount of $535,358.
Eric Goldman provides an overview of the case and its factual background, and criticizes the opinion’s failure to discuss the relevance of the statutory protection for Internet services found in 47 U.S.C. § 230. Digital Society has a brief discussion of the decision. Ars Technica has two posts from 2009 (February and November) that provide useful background on the case. (more…)