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How The Wolf of Wall Street helped to change internet laws

31 · JAN ·2014

The Wolf of Wall Street is the riotous new film by Martin Scorsese. It features Leonardo Di Caprio as Jordan Belfort; a real life stock broker who during the 1990’s made almost a million dollars week while at the helm Stratton Oakmont; a brokerage house that engaged in fraudulent and illegal practices.

Anyone who has seen the film, or read Belfort’s memoir, will know that Scorsese and Di Caprio had a rich well of outrageous, high octane, hedonistic and downright depraved material upon which to make a highly entertaining picture. We’ll forgive them then for failing to chronicle a lesser known part of Belfort’s and Stratton Oakmont’s story; that of the 1996 Supreme Court case Stratton Oakmont vs Prodigy Internet Services, which pretty much set the rule for internet publishing and distributer liability that still exists to this very day.

In the mid 1990’s a computer bulletin board (i.e. posting forum) hosted by Prodigy Internet Services, began to be used bycustomers who’d been stung by Stratton to anonymously post negative comments about them. Consequently Stratton decided to bring Prodigy in front of the New York Supreme Court and managed to sue them successfully for libel (with Prodigy forced to pay damages as a results).

The verdict caused uproar within the internet community; not because Stratton were a slippery bunch of charlatans (although of course they were) but because of the dangerous precedent it had set – i.e. that a provider of an interactive web service would be treated as the publisher of content provided by another user on their platform (think Twitter being responsible for whatever anyone says on it).

In 1996 the Supreme Court responded to this with Section 230 of the Communications Decency Act, freeing ISP’s or service providers from liability of any defamatory user content posted on their platforms and overturning Stratton Oakmont vs Prodigy Internet Services in the process.

As a piece of legislation it’s become fundamental to the way in which the internet has developed. Certainly social media would never have taken off if providers themselves were made responsible for what was said on their platforms and the internet would be a less free and democratic place – with users unable to share their experiences, good and bad, with all and sundry. It’s also worth noting that the environment those rules have created make prospering from the long term defrauding of consumers (as Stratton did) a less viable business strategy.

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Posted by Sanita Karra