Classified Ad Platform is Sentenced for Failing to Implement Security Measures to Verify Users

The court rejected the claim holding that the defendant was a mere internet intermediary who had not been part of the contractual relationship that led to the claim and had not been part of the negotiations between the plaintiff and the alleged seller.

The plaintiff appealed the court’s decision, arguing that the defendant had acted as a service provider under the terms of Consumer Protection Law No. 24,240 and had breached its security obligation, i.e., the duty to protect him as a consumer.

The Court of Appeals reversed the lower court's decision and admitted the plaintiff's claim. In so doing, the Court held that OLX and the plaintiff were bound by a consumer relationship. The question was whether OLX had breached the duty to preserve consumer safety that arises from section 42 of the Argentine Constitution, section 1710 of the Civil and Commercial Code (duty to prevent harm) and section 50 of Consumer Protection Law No. 24,240.

The Court sustained that OLX does not participate in the transactions that the parties engage in as a result of the listings published on the platform. Thus, OLX had no obligation to verify that the alleged seller actually had the listed cell phone in his possession. However, the Court also held that OLX indeed had the obligation to verify the alleged seller's identity and had failed to do so.

Further, it added that because OLX’s platform connects people interested in buying or selling products, “this service must be provided with the due diligence required from a professional service provider that acts in an enormously risky environment, insofar as the service is intended to enable transactions among strangers and among a very diverse, massive, unadvised and possibly impulsive public, which must be subject to minimal care.” The Court further pointed out that “[t]he defendant is not liable for not controlling what it cannot control, i.e., a negotiation that, like the one that the plaintiff ended up having with his assailant, took place outside the platform. Instead, the defendant is liable for not controlling what it could have controlled, i.e., the accuracy of the data pertaining to the identity of the parties.”

Thus, the Court found that releasing the platform's users from the duty to provide personal data and validate their identity “led to virtual anonymity, which facilitated the criminal action.”

The Court, therefore, ordered OLX to compensate the plaintiff in AR$ 2,673,000 for physical and psychological damages, pain and suffering, and punitive damages