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YouTube sued by crypto firm Ripple over scam videos, in major challenge to tech giant

The lawsuit could provide more grist for lawmakers from both parties who have called for Congress to place more legal obligations on big tech companies.

The CEO of Ripple, a San Francisco-based finance and cryptocurrency firm, filed a lawsuit on Tuesday that accuses the streaming giant of turning a blind eye to scams that have defrauded consumers.

In a complaint filed in San Francisco federal court, Garlinghouse and Ripple accuse YouTube of damaging their brand and reputations, and demand an unspecified amount of financial compensation. The complaint also asks the court to forbid YouTube from profiting from the scams, or from allowing them to continue.

The alleged scams in question resemble those found on other social media platforms, and typically use the image of prominent executives, including Bill Gates and Richard Branson, to offer “giveaways.” In most cases, the scammers ask the victims to send a small sum in order to receive a larger windfall—only to abscond with whatever funds they receive.

In the case of YouTube, the complaint cites numerous instances where hackers took over the channels of legitimate creators and replaced their videos with ones advertising Ripple-related scams. The scammy Ripple videos often show media interviews with Garlinghouse lifted from reputable sources, and overlaid with invitations to participate in “giveaways” of the cryptocurrency XRP.

According to the complaint, YouTube fails to adequately restrict the spread of such videos, and even profits from them by letting the scammers pay to promote them. These promotions allegedly involve the scammers buying keywords like “Ripple” and “Brad Garlinghouse” in order to target the videos to people searching for such terms.

The complaint adds that Ripple employs a third party firm to track such scams, and instruct social media companies to remove such scams. Yet, despite sending hundreds of notices to YouTube, Ripple says the media giant has responded slowly or not at all.

“YouTube regularly touts its robust tools for self-regulating content on its platform, which purportedly include “cutting-edge machine learning technology” and a sprawling network of human reviewers,” the complaint reads. “But in this case, faced with a pervasive Scam, YouTube chose, and continues to choose, inaction.”

A recent search of YouTube by Fortune unearthed a handful of videos that appeared to be scams using Garlinghouse’s image as a lure. The majority of search results for “Ripple” or “Garlinghouse,” including the top ones, however, seemed to be legitimate content.

A spokesperson for YouTube, which is owned by Google, provided the following statement, We take abuse of our platform seriously, and take action quickly when we detect violations of our policies, such as scams or impersonation.”

In an interview with Fortune, Garlinghouse said he decided to sue YouTube in response to the troubles he encountered in trying to remove a wave of social media accounts impersonating him. He also expressed sympathy for the victims of the scams, and described a spate of violent threats he has received from those who falsely believed he had conspired to steal their money.

Legal uncertainty over YouTube’s responsibility

Impersonator scams involving cryptocurrency are pervasive on social media. These include a recent one where hackers took over a popular YouTube channel, and purported to run an “ask me anything” Q&A with the CEO of the cryptocurrency giant, Coinbase. And on Twitter and Instagram, crypto enthusiasts have frequently encountered scam accounts displaying the name and face of prominent people in the industry, including Ripple’s CEO.

Garlinghouse, however, says he and Ripple chose to single out YouTube because the other social media platforms have been relatively more responsive to complaints about scammers and fake accounts. He added that more crypto crooks are migrating to YouTube in recent months, and accused the media giant of failing to make a serious effort to curtail them.

“YouTube generated $15 billion in ad revenue last year, and you’re telling me they can’t spend more money to police obvious scams that violate their own terms of service?” he said.

Ripple and Garlinghouse could face an uphill struggle with the lawsuit. The obstacle is the same one that critics of social media platforms have long confronted: A law that shields Internet companies from liability for the actions of their users.

Commonly known as Section 230, the law ensures that startups don’t face ruinous litigation when a user posts a comment on their website, and also protects tech giants like Facebook and Amazon from many forms of liability.

On its face, YouTube would appear able to invoke Section 230 to deflect responsibility for the cryptocurrency scammers. Garlinghouse, however, notes the complaint accuses YouTube of damaging its trademark—and that trademarks are intellectual property, which is excluded from the general Section 230 shield.

Ripple’s lawsuit, which also accuses YouTube of unfair competition and violating Garlinghouse’s right of publicity, also has the potential to win political support. In recent months, lawmakers from both parties have called for Congress to narrow the scope of Section 230 and to place more legal obligations on big tech companies. In this sense, the lawsuit could provide new grist for politicians, including Sen. Josh Hawley (R-Mo), who are outspoken critics of platforms like YouTube.

The lawsuit is also notable because Ripple, which recently took in $200 million in outside investment, has the means to take on YouTube in a protracted court battle.

Garlinghouse says Ripple will use any damages or settlement money it receives from the case to reimburse victims fleeced by the YouTube scams. A former senior executive at Yahoo, he also acknowledged that Silicon Valley companies have enjoyed many advantages from Section 230 but that the law, passed in 1996, is now inadequate.

“The world changes. Times change. I can understand why the 1996 Act was written, but that was 25 years ago. Platforms have been abused in a way not anticipated and now tech leaders need to be out front, and evolve and adapt.”

An earlier version of this story wrongly quoted Garlinghouse as stating platforms had abused their power, rather than having been abused. The story has also been updated to include a comment from YouTube.

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