Australia: Face Off Over Facebook! – ASB and Social Media
Direct Selling Legal Update

Two companies’ Facebook pages have been found by the Australian Advertising Standards Board (ASB) to be advertisements ¹ . As a result, those Facebook pages must comply with the National Advertisers’ Code of Ethics (the Code). These determinations follow on from a Federal Court decision which, as we previously reported in 2011, found that a company was liable for misleading and deceptive statements made on its Facebook page by its Facebook “fans” because it was aware of the statements but had not removed them ² .

In these ASB determinations, the Official Smirnoff Facebook page was found to not be in breach of the Code, while the Official Victoria Bitter Facebook page was found to be in breach.

Direct Selling Organisations (DSOs) have been among the earliest businesses aware of the benefits of social media as a way of reaching out and connecting with potential new independent consultants and consumers. What are the implications of these determinations for DSOs?

What is the ASB?

The ASB oversees the self-regulation of advertising in Australia and determines complaints made against advertisers in accordance with the Code. The ASB’s decisions are therefore not legally binding nor are they enforceable; however, its decisions are cited widely as reflecting largely community values. The ASB approach reflects broader public concerns and suggests that companies are obliged legally to moderate their Facebook pages and other social media activities.

Under the Code, an advertisement is :

Previously, the Federal Court had found Allergy Pathway Pty Ltd to be in contempt for not removing false or misleading representations that were posted by its fans/followers on its Facebook and Twitter pages when it was aware of the statements and had not taken any action to remove them ³ . Allergy Pathway Pty Ltd had been ordered previously by the Federal Court to cease making misleading or deceptive representations.

The Complaints

Separate complaints were lodged with the ASB in respect of the Official Facebook pages for:

• “Victoria Bitter” or VB beer maintained by Fosters Australia, Asia and Pacific (Fosters); and
• Smirnoff vodka maintained by Diageo Australia Ltd (Diageo).

The complaints in respect of both of these Official Facebook pages were similar in that they considered that comments posted on the pages by fans of the brands featured, amongst other matters, sexism, racism and other forms of discrimination; irresponsible drinking messages; obscene language; and material connecting alcohol consumption with sexual or social prowess.

Why is a Facebook page an advertisement?

In its response to the complaint, Fosters noted that the Facebook page was managed by an agency in conjunction with the marketing team of a related company. In commenting generally on the nature of social media, Fosters noted that a brand’s Facebook page reflects the community who participate in discussion on the page as well as the brand’s personality. If an individual viewing the page did not like the “conversation” which was taking place, they could either stop viewing the page or seek to influence the conversation by adding their own comments. Fosters submitted that it was not feasible, from a commercial perspective, for the comments on a Facebook page to be moderated before they were posted. Also, it considered that the comments were not an advertisement because Fosters did not have a reasonable degree of control over them.

Unsurprisingly, Diageo, the company responsible for the Official Smirnoff Facebook page did not consider its Facebook page was advertising for a number of reasons including that Facebook, as a communications channel, is similar to television and radio and, as such, it is inappropriate to treat all content as advertising. Diageo submitted, like television and radio, Facebook is a platform by which people can engage in many different ways, for example, for entertainment purposes and building relationships, not just for advertising purposes. Further, the creation of Facebook pages is free in contrast to traditional forms of paid-for advertising. Accordingly, Facebook pages should not be treated in the same manner as traditional forms of paid-for advertising.

The ASB was not persuaded by the arguments of either Fosters or Diageo. In the Case Report in respect of the Official VB Facebook page, the ASB, in determining that the Code applied to advertiser Facebook pages concluded that:

In the Case Report in respect of the Official Smirnoff Facebook page complaint, the ASB determined that:

Accordingly, any user generated content on a company or brand’s official Facebook page (or other social media site) may be treated as advertising.

ACCC Response

Following on from these determinations, an ACCC Commissioner has been reported as stating that large companies with significant resources would be expected to take down any comments in breach of Australian law quickly, within a day or less of the comments being posted. ⁴

Implications

Accordingly, following the Federal Court decision in the Allergy Pathway case and the ASB’s determinations, a company or brand’s Official page on social media sites such as Facebook may constitute advertising and will be expected to comply with the requirements of, for example, the consumer protection provisions of the ACL in respect of misleading and deceptive conduct and false testimonials. This is regardless of whether the content is posted by the company or is user-generated.

In light of the above, DSOs should give serious consideration as to how to best manage their use of social media sites, especially any content generated by users. Like it or not, DSOs should be monitoring user-generated content on their social media sites to remove as quickly as possible any content which may fall foul of Australian legal requirements. DSOs should also consider whether, in light of the above developments, they need to amend their social media policies and procedures to address these issues.

Footnotes

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.