Ohio school districts sue Facebook for accepting ECOT ad purchases
dispatch.com
dispatch.com
And while this is a school, other business might be operating in advertising-heavy industries where running ads is their plan to get out of financial ruin.
The districts, which may never be made whole for state funding they lost when ECOT inflated attendance, are alleging that Facebook knew the online charter school was financially failing when it sold ads to help ECOT boost enrollment. That, under Ohio law calls, would be an illegal and “fraudulent transfer.”
Somehow Facebook was supposed to know about the school's financial problem? I doubt people in Facebook's office in California are watching the local news for Ohio.
Facebook just approves ads for content, but as for targeting and budgeting that's all self-controlled and mostly automated other than ad content being approved. I believe Google's ad system works a similar way, ad text or image is approved but as for budget and keywords that's all on you to set up, pause, resume, etc.
Kinda feel like the school districts are stretching the law here. I wonder if the school paid with a credit card? Did their bank and credit card network commit fraud too for allowing the payment to go through?
For example, Facebook actually can't legally permit ads that show products falsely claiming health benefits. If they're caught doing it, they're open to legal liability and their best response is to immediately discontinue as soon as they know about it.
Other online ad providers actually go through varying amount of work to try and make sure they don't get caught here. This is just part of the operating cost of being a big ad provider. Either you spend lots of money avoiding the bad ads (difficult) or you lose money to lawsuits for letting them through (damaging).
Not trying to absolve Facebook of guilt. If they do business in Ohio they should follow Ohio law.
Simple solution: If you're buying ad inventory in Ohio, Facebook should ask you to check a box that confirms you're not insolvent.
Had they done that, they'd have a pretty good ass-cover for this kind of lawsuit. "We didn't ask" is not a great defense. "They defrauded us" is a much better one.
Each state has its own laws, much like how each country has its own laws. It's on a multinational company to comply with all of them... Or not do business.
I'm sure they'll find the absolute minimum way to remain compliant going forward.
The argument that they shouldn’t have to vet ads is clearly nonsense: if you are selling ad space you are required to adhere to advertising standards. In this state at least it sounds like those standards include not selling ads to companies in extreme financial distress. The fact that FB is trying to lower costs for ads by not following the law is kind of irrelevant.
The lawsuit doesn't claim that "somehow Facebook should have known." It claims that Facebook actually knew. Big difference.
> “Facebook knew what was going on,” said Ellen Kramer, the lead attorney hired by the school districts. “There was all sorts of stuff being posted about the demise of ECOT on Facebook and yet they still took this money. So Facebook knew or should have known of the financial difficulties ECOT was experiencing at the time they accepted the payments.”
I don't expect Facebook to use opinions posted on its site to determine facts about its business dealings.
It would be one thing if Facebook Payments found that ECOT's bank was no longer willing to pay out of their account, and accepted ECOT's office building in exchange for running ads, or if they're working on a credit basis and learned that ECOT's FICO scores had tanked. It's completely different if they're supposed to read news articles or worse, forum comments to make an estimation of their customer's financial solvency.
They took the money, and according the law they shouldn't have done that. Facebook doesn't get some magical pass because their systems are automated. If they want to do business, they need to follow the same rules as everyone else. If their automation doesn't cover all the corner-cases of the law, that's on them and they should be deprived of any profit derived from their rule-breaking.
What about another country?
Would it not be more reasonable to require Facebook to have a physical presence in the locality in order to be bound by its laws?
Does Facebook have a branch office in Ohio?
If they do then they have no excuse.
https://clerkweb.summitoh.net/PublicSite/CaseDetail.aspx?Cas...
Then Facebook has a license in Ohio too since Messenger lets you send money to people over chat.
https://www.facebook.com/payments_terms/licenses
So maybe that's one way they can claim power over Facebook.
Looks like the last action on the case was 05/17/2019 where it was assigned to another judge. So wonder what the next steps are for this case, will be interesting to follow.
I was just curious about ECOT yesterday since that's the school I did my final years of high school and was wondering about where people would get their transcripts if say for college... Looks like records were being transferred to the last known district of residence, but there's also an email if you need help getting them it looks. I'm guessing probably where you lived when you were last in school then, probably not where you are now if you moved since then. The Educational Service Center of Lake Erie West in Toledo was the sponsor of ECOT.
http://www.esclakeeriewest.org/ECOTInformation.aspx
Also looks like the server is at Franklin County courthouse, the judge there approved $300,000 to upgrade the server to preserve it, as the FBI is also looking into the school over the campaign contributions. Then the other big thing ECOT got in trouble over was the way of accounting attendance.
https://www.dispatch.com/news/20190801/judge-approves-moving...
I liked ECOT. If I needed to ask questions I could send a email(they had a fake email system, wouldn't go to external addresses) or even call up... I felt they cared a lot more compared to the last public school I went to. Actually got way better grades too. But someone else who went to ECOT after me felt a bit different, so maybe things changed more since I went.
I wish we had more school choice in America, instead of the city school being the default. Wish more competition but I think schools in general feel threatened and enjoy having a monopoly on education. Then apparently it's easier to fire teachers at charter and private schools, so public school teachers can be lousy and have great job security.
Also other schools could try and claim they lost money too because of this, but aren't part of the lawsuit... Wonder how that works in the future if say Facebook lost and ordered to pay which is split between the schools. Can the other schools join in on the lawsuit or would they need to file separately? Not sure if it's technically considered a class action, since usually you get a notice about the lawsuit to join it automatically if you do nothing with a date to submit a claim or you opt-out to then file your lawsuit or get nothing. Be interesting if these schools won, and then other schools sue for the same amount... Then would FB have to pay out twice the amount? Unless they are only considering what those schools believe they lost directly that was spent on ad money, and not the total lost statewide, as that would make more sense - but I think they want the total money spent at FB total not considering which schools the funds originally came from. As ECOT had students in all 88 counties across the state, so it sounds like other schools not part of this lawsuit might be leaving money on the table if FB is found in the wrong.
They should be made to respect all the laws smaller businesses are forced to respect, no exceptions.
But if it were up to me it would come down to geo-targeting. If you can geo-target a locality, you need to abide by the rules there.
But in the context of the system we have now, it really is silly to say that an entity as large as FB "knows" something.
And further, in the context of the lawsuit, trying to say that one company should be responsible for the internal financial situation of another enforces centralization -- and will ultimately favor large companies.
I've always thought it's interesting though how an online company is supposed to follow the laws of the multiple states, and even worldwide since a website is accessible worldwide without borders. There are cases where US and European law conflicts. So a company has to decide which law is better to break. I feel the US would be way more aggressive, so maybe European law would have to take the backseat when the company lawyers do a risk analysis. Some stuff is as clear as mud and seems made up as they go.
Then also at least 2 countries, maybe more require data for citizens to be held there so that countries own governments can backdoor it. So a backup must be replicated and stored in that country too.
The top big tech companies have the money to deal with this, but some stuff like this is very hard for startups. Also wouldn't surprise me if some of these companies try to push regulations to make it harder for startups, so they can get comfortable and stay an established player in the market without needing to compete or innovate. Then also localization of languages seems like duplicated efforts.
Kinda reminds me of those posts people copy and paste as a status update claiming to amend the terms of service. Well, that's not how things work, but secondly, I'm pretty sure Facebook never actually reads that post unless it's reported as spam or abuse. So I think just because someone posts something on FB, doesn't mean the company had knowledge. Then even if someone does flag a post, probably a set of guidelines to follow based on the content and community standards instead of doing an analysis of the finances.
That's confusing. Can someone explain?
AKA students are walking cash machines to the schools.
Their education determines how well they can support future community needs. Public education is a continuous reinvestment in a community.
Disclosure: I previously worked for ECOT.
That's like some bizarre self hating facebook worship at that point.