A recent decision of the Federal Court has sounded a warning to
all businesses which use social media as part of their marketing
strategy. In finding that a company which maintained a Facebook fan
page was liable for misleading testimonials posted on that fan page
by users of the company's products, the Federal Court has
emphasised that liability for the publication of misleading,
deceptive, or defamatory words is not limited to the original
author of the words.
In 2009, the Australian Competition and Consumer Commission
(the ACCC) took court action against a company
called Advanced Allergy Elimination Pty Ltd, which subsequently
changed its name to Allergy Pathway Pty Ltd (Allergy
Pathway). The ACCC alleged that Allergy Pathway had made
misleading and deceptive statements about the ability of Allergy
Pathway to identify, treat, and cure allergies. The Federal Court
found that misleading and deceptive statements had been made and
made a number of remedial orders, including that the court receive
from Allergy Pathway (and from its director, Mr Paul Keir)
undertakings not to repeat the misleading and deceptive
In 2010, the ACCC brought further proceedings against Allergy
Pathway and Mr Keir alleging that each of them was in contempt of
court as a result of what was said to be repetition of the
misleading and deceptive statements in breach of the
Allergy Pathway, and Mr Keir, admitted that some of their
conduct was in breach of the undertakings, including the
publication of material on Allergy Pathway's own website,
and the publication of that material on Twitter by means of links
to Allergy Pathway's website. However, Allergy Pathway and
Mr Keir both disputed that they were liable for testimonials posted
by clients of Allergy Pathway (and which replicated certain of the
misleading and deceptive statements) on the "wall" of the
"fan" page which Allergy Pathway had set up on
Had Allergy Pathway and Mr Keir "published" the
testimonials on the Facebook "fan" page?
The Federal Court found that Allergy Pathway and Mr Keir had
published the testimonials, even though they were not responsible
for the initial publication. Liability for publication was
established by two factors; firstly, knowledge of the testimonials,
and secondly, the fact that although Allergy Pathway and Mr Keir
had the ability to remove the testimonials, they did not so.
As a result of the breaches of the undertakings, Allergy Pathway
and Mr Keir were each fined $7,500 for contempt of court, and they
were also ordered to pay the ACCC's costs. Extensive orders
for corrective advertising were also made, including on Allergy
Pathway's Facebook and Twitter pages.
Lessons from the case
Although the finding that there had been publication in this
case led to a finding of contempt, the lessons of the case are
equally applicable whenever a there is a risk of liability for the
publication of misleading, deceptive or defamatory statements. The
risk is greater in industries where regulators are active (such as
the medical devices and pharmaceutical industries) and, as Allergy
Pathway and Mr Keir found out, if you have been the subject of
previous regulatory attention, you need to be particularly
Managing the risk is simple - if your business uses social media
platforms which allow you to monitor and delete content posted to
those platforms by your customers (or by members of the public)
then those platforms need to be carefully monitored by people with
the necessary skills to understand the content which is likely to
get you into trouble with regulators, competitors or customers. We
can help you identify the relevant issues for your business, so
that you can effectively manage the risk and ensure that your
"fans" bring cooling breezes, not ill winds.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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