Protecting liabilityof user generated content

What are the best ways of protecting a site from legal liability of User Generated Content?

Is simply having a user click a checkbox that they agree to take responsibility for images they post enough? I know someone that got busted for using an image that wasn’t properly licensed. The people that enforce this stuff are pretty tough. What needs to be done to protect a site owner?

I once worked with a woman whose husband owned a large grocery store. They were sued by a customer who slipped on some grapes on the produce dept. floor. I don’t believe the owner put the grapes there. Chances are they fell when another customer was pawing through them.
I am not a lawyer, but I believe the legal term used was something like “due diligence”. In other words, if you’re going to have lose grapes in your grocery store, you better have an employee there with a broom and dustpan ready to sweep up any that fall.
When you own a business, the buck stops with the business owner. The only difference is that on the web, it may stop with your hosting provider, but that doesn’t exonerate you from liability. In my opinion (personal, not legal), sites with copyright infringement disclaimers are sort of like houses with “Beware of the dog” signs on their front gates. They are advertising the fact that they know someone might be bitten but totally unaware that their warning is exactly what will turn around and bite them.
Bottom line, keep your broom handy to sweep up those grapes and your dog under your control at all times.

Thank You Shy Flower,
This is an interesting comment.

What are the best ways of protecting a site from legal liability of User Generated Content?

There are two ways the law protects web site owners from liability of user generated content.

Under Section 230 of the Communications Decency Act, web site owners are not liable for the tortous acts of their users (usually cited for defamation actions but may be used for some other liabilities as well.) The protections for web site owners under Section 230 are automatic and the web site owner need do nothing to envoke the safe harbor.

Under the Digital Millineum Copyright Act, web site owners can provide a safe harbor for copyright infringement by their users by placing a DMCA notice on their web site (I put mine in the TOS.) With the proper DMCA notice, the web site owner can avoid liability for the copyright infringement of their users.

What about in the case of a user repeatedly reposting copyrighted information? And more, what if the owner of the site is warned multiple times?
Case in point: Illegal software distribution