Many businesses have now embraced social networking sites as a
means of advertising their products and services. Facebook fan
pages are particularly popular.
However, a recent Federal Court decision has emphasised the need
for businesses to develop an effective online compliance strategy
to mitigate the risk of being liable for the publication of
statements made by customers or members of the public on the
business's social networking sites.
Businesses need to monitor statements posted by customers or
members of the public on their website or social networking sites
and delete any comment that may be in breach of the Consumer
and Competition Act 2010 (Cth), other laws or offensive to
competitors or customers.
In the case of the Australian Competition and Consumer
Commission (ACCC) v Allergy Pathway Pty Ltd (Pathway) (No 2)
 FCA74, the Federal Court found that Pathway and its former
director, were liable for testimonials posted on its Facebook and
Twitter pages, even though the company itself did not post the
In 2009, the ACCC alleged that Pathway, an allergy clinic, had
made misleading and deceptive statements about the ability of
Pathway to identify, treat and cure allergies. The Federal Court
found that misleading and deceptive statements had been made and
ordered Pathway and its former director Mr Paul Keir to comply with
undertakings not to publish or make any further misleading or
In 2010, the Federal Court fined Pathway and Mr Keir, for
contempt of court, finding that they breached undertakings made to
the court in relation to "false, misleading or deceptive"
posts published on the company's website, Twitter, YouTube and
Allergy Pathway and Keir conceded they were in breach of their
undertakings in relation to the social media posts that the company
had made containing client testimonials. However, Pathway and Mr
Keir argued that they were not liable for testimonials posted by
clients of Pathway.
Federal Court Justice Finkelstein found that the glowing
testimonials on the sites, including claims that Pathway could
"cure or eliminate virtually all allergies or allergic
reactions" were false.
Justice Finkelstein was satisfied that liability for publication
was established by two factors:
knowledge of the testimonials; and
the fact that although Pathway and Mr Keir had the ability to
remove the testimonials, they did not do so.
Justice Finkelstein said "While it cannot be said that
Allergy Pathway was responsible for the initial publication of
testimonials, it is appropriate to conclude that Allergy Pathway
accepted responsibility for the publications when it knew of them
and decided not to remove them" and hence "it became the
publisher of the testimonials".
ACCC Chairman, Graeme Samuel said the landmark decision sends a
message to businesses "to be careful if you're going to
host a website, be it Facebook or Twitter or your own separate web
address that permits third parties to publish representations or
comments in relation to your business which are misleading and
"As the host of the website you become responsible for them
so you must take steps to have them removed".
What can businesses do to mitigate liability?
frequently monitor their own websites and their social media
implement an effective online compliance strategy that is
regulated by people with the necessary skills to understand the
kinds of statements and content that are likely to get it into
trouble with regulators, competitors or customers;
appoint an internal response team and response protocols;
immediately notify social media platforms of any concerns and
request removal of any concerning or infringing content
deal with negative, false or misleading content promptly and
These recommendations could significantly weaken the Australian patent system and make it more expensive for innovators.
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