Can Facebook itself be held liable for fraudulent numismatic auctions conducted on its platform?

IT Act Section 79 — the intermediary safe harbour

Section 79 of the IT Act 2000 provides that 'an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him' if: the intermediary's function is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted; the intermediary does not initiate the transmission, select the receiver, and does not select or modify the information contained in the transmission; and the intermediary observes due diligence while discharging its duties.

Facebook, Instagram, and other social media platforms are intermediaries within this definition. When a seller on Facebook Live conducts a fraudulent auction, Facebook did not initiate that auction, did not select the participants, and did not modify the fraudulent representations. Under Section 79, Facebook is not liable for the seller's fraud.

The IT Rules 2021 — when safe harbour can be challenged

The IT (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 set out the due diligence obligations intermediaries must observe to retain their Section 79 safe harbour. These include: appointing a Grievance Officer (required for significant social media intermediaries); establishing a complaint mechanism; and acknowledging and resolving complaints within specified timeframes.

If a victim reports a fraudulent numismatic auction to Facebook through its Grievance Officer and Facebook takes no action within the prescribed timeframe, the victim can argue that Facebook failed to observe due diligence — and its safe harbour protection for that specific content is compromised. This does not guarantee Facebook's liability, but it removes one layer of protection. The Shreya Singhal v. Union of India (Supreme Court, 2015) framework established that intermediaries must act on actual knowledge of specific unlawful content — not on general awareness of potential misuse.

Practical steps — how to report to Facebook

For numismatic fraud on Facebook: use Facebook's in-platform reporting mechanism for the specific post, video, or account; separately, submit a formal complaint to Facebook's designated Grievance Officer in India (required under IT Rules 2021 for Significant Social Media Intermediaries); state the specific fraudulent content, the account details, and the nature of the fraud. Keep records of the complaint submission and any response. This creates the documentary basis for challenging Facebook's safe harbour if they fail to act.

Laws & authorities referenced in this chapter

IT Act 2000 — §79 (intermediary safe harbour; conditions for protection from user content liability)

IT (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 — due diligence obligations

Shreya Singhal v. Union of India — Supreme Court, 2015 — intermediary liability; actual knowledge requirement

Consumer Protection Act 2019 — §2(17) (definition of 'e-commerce entity'; platform obligations)