National Whistleblower Center Urges Senate to Consider SEC Whistleblower Petitions at Hearing on Bad Behavior in Big Tech

On October 28, the U.S. Senate Commerce Committee is holding a hearing about the liability of big tech companies in bad behavior occurring on their sites. Ahead of the hearing, the National Whistleblower Center (NWC) sent a letter to the Committee urging them to consider whistleblower petitions filed to the U.S. Securities and Exchange Commission (SEC) concerning misrepresentations and misleading omissions by Facebook about three serious issues on the site: illegal wildlife trafficking, antiquities trafficking, and terror and hate content.

As noted in the letter, “since 2016, NWC has been working with confidential whistleblowers to hold social media companies accountable for misrepresentations and omissions about their handling of illegal and otherwise harmful content on their websites.” NWC has worked with a number of anonymous whistleblowers to file SEC whistleblower petitions related to these issues. While Section 230 of the Communications Decency Act controversially offers tech giants like Facebook immunity for content hosted on their websites, the petitions argue that as a publicly-traded company Facebook is beholden to U.S. Securities laws that prohibit publicly-traded companies from profiting from illegal activities. According to the petitions, Facebook is both profiting from illegal activity on its site and putting its shareholders at risk by failing to fully disclose the amount of illegal activity the site hosts and promotes.

NWC claims that “only through a substantial civil or criminal penalty can the SEC ensure that Facebook’s deceptive practices come to an end and enable shareholders and the public to bring pressure to bear on the company regarding its handling of wildlife trafficking and other illegal activities on the site.”

So far, NWC has filed four whistleblower petitions to the SEC regarding illegal wildlife trafficking on Facebook. These petitions provide extensive evidence regarding how Facebook has “misled shareholders and the public about the extent of wildlife crime they have been facilitating.” These whistleblower petitions have received widespread media attention. An AP story detailing the petitions explains that “Facebook is displaying advertisements for well-known American corporations on group pages operated by overseas wildlife traffickers illegally selling the body parts of threatened animals, including elephant ivory, rhino horn and tiger teeth.” 

According to NWC, “Facebook is well aware that its website is being used to facilitate wildlife trafficking, along with other illegal activities. And while it has increased its efforts to remove illegal activity from its website in recent years, there is still no significant data available about the company’s efforts to regulate wildlife trafficking.”

Stephen M. Kohn, Chairman of the Board of NWC and whistleblower attorney at qui tam firm Kohn, Kohn, & Colapinto (which helped file the petitions), claims that “it is intolerable that a corporation with the wealth and international reach of Facebook can play a major role which has already claimed the last male Northern White Rhino, by selling products from animals on the critically endangered species list.”

In 2019, NWC worked with an anonymous whistleblower to file a petition to the SEC detailing terror and hate content on Facebook and Facebook’s misleading statements about its handling of the problem. In 2018, Facebook stated to the public that it could now block 99% of terrorist content of ISIS, al-Qaeda, and affiliated groups before it was reported by users. However, the whistleblower petition contains an analysis “showing that during a five-month period in late 2018, the percentage of profiles of those who identify themselves as Friends of selected terrorist groups removed by Facebook was less than 30%. Of the profiles of those Friends who displayed symbols of terrorist groups, Facebook removed just 38% during the study period.”

Additionally, the petition claims that Facebook is actively creating new terror content on its site with its auto-generation features. The petition details how Facebook auto-generates Facebook business pages for terrorist organizations listed on self-identified terrorist’s profiles. Facebook also connects users to existing community pages or Facebook groups for terrorist groups listed on their profile. The petition further details that these same problems exist for white supremacy groups and content in the United States.

According to Sharon Y. Eubanks, NWC’s Chief Counsel, “Facebook’s role in auto-generating pages for hate and terror groups wholly undermines claims by Facebook that it bars hate and terror groups and otherwise serves as a content-neutral platform. There is a great divide between Facebook’s statements to shareholders and the reality of its handling of hate and terror groups.”

Lastly, NWC is supporting an anonymous whistleblower in a petition to the SEC “to hold social media companies accountable for allowing looters of antiquities to run smuggling operations from their websites.” Similarly, to illegal wildlife trafficking, Facebook is being used by looters and buyers to connect and coordinate the illegal sale of antiquities looted from countries such as Syria. The petition provides evidence showing Facebook’s role as a facilitator in these illegal deals as well as Facebook’s deceptive statements downplaying this role.

The Senate hearing on October 28 will feature testimony by Facebook CEO Mark Zuckerberg along with representatives from other major tech companies. The hearing “will examine whether Section 230 of the Communications Decency Act has outlived its usefulness in today’s digital age” and “examine legislative proposals to modernize the decades-old law, increase transparency and accountability among big technology companies for their content moderation practices,” according to the hearing webpage.

In their letter, NWC asks the Senate Commerce Committee to consider these companies obligations on federal securities laws. The letter states: “Although Facebook continues to enjoy Section 230 immunity for content hosted on its website, the company is nonetheless accountable under federal securities law. To that end, we urge the Committee to use the opportunity to investigate the specific steps that Facebook is taking to address harmful content on its website and to evaluate the accuracy of its statements to shareholders and the public on this topic.”

Read:

NWC’s Letter

It’s time for Facebook to be honest about its content management

Hold Social Media Companies Accountable – National Whistleblower Center

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