When are you liable for third par­ty post­ings about your busi­ness on a social net­work­ing site?

In brief – Com­pa­nies can be held respon­si­ble for state­ments by third parties

On 10 Feb­ru­ary 2011, the Fed­er­al Court of Aus­tralia hand­ed down judg­ment in con­tempt pro­ceed­ings that may have sig­nif­i­cant impli­ca­tions for busi­ness­es which use social media to mar­ket them­selves. The Court held that a com­pa­ny and its sole direc­tor were respon­si­ble for state­ments made by third par­ties on the com­pa­ny’s Face­book site.

Aller­gy Path­way and the ACCC

Aller­gy Path­way Pty Ltd oper­ates clin­ics that it asserts diag­nose and treat aller­gies. The tech­niques that it uses have not been med­ical­ly val­i­dat­ed. In 2009, the Aus­tralian Com­pe­ti­tion & Con­sumer Com­mis­sion took action against the com­pa­ny, alleg­ing that it was engag­ing in mis­lead­ing and decep­tive con­duct, in con­tra­ven­tion of what was then sec­tion 52 of the Com­mon­wealth Trade Prac­tices Act 1974 (now dealt with under sec­tion 18 of the Aus­tralian Con­sumer Law).

Aller­gy Path­way did not defend the mat­ter and, on the basis of expert med­ical evi­dence, the Court found that the com­pa­ny was engag­ing in mis­lead­ing and decep­tive con­duct. The com­pa­ny and its sole direc­tor gave cer­tain under­tak­ings to the Court that they would not make the same or sim­i­lar rep­re­sen­ta­tions for three years.

Con­tin­ued rep­re­sen­ta­tions on Face­book and Twitter

Fol­low­ing the deci­sion, the ACCC become con­cerned that Aller­gy Path­way was con­tin­u­ing to make rep­re­sen­ta­tions through its web­site and its pres­ence on Face­book and Twit­ter. There were four cat­e­gories of rep­re­sen­ta­tions of con­cern, namely:

• State­ments and links to state­ments post­ed by the com­pa­ny on its web­site and Face­book and Twit­ter pages and in a video post­ed on Youtube and on its Face­book and Twit­ter pages
• Tes­ti­mo­ni­als writ­ten by clients of the com­pa­ny and post­ed by the com­pa­ny on its web­site and Face­book and Twit­ter pages
• The com­pa­ny’s respons­es to queries post­ed by the pub­lic on its Face­book ​“wall”
• Tes­ti­mo­ni­als writ­ten by clients and post­ed by those clients of the com­pa­ny on Aller­gy Path­way’s wall on Facebook

Rep­re­sen­ta­tions by third par­ties on the Face­book wall

The com­pa­ny, and its direc­tor, con­ced­ed that the first three cat­e­gories breached the under­tak­ings that they had giv­en in the pre­vi­ous pro­ceed­ings. No con­ces­sion was made in rela­tion to tes­ti­mo­ni­als writ­ten by third par­ties, and it is this mat­ter which the Court had to decide. 

The Court found that the tes­ti­mo­ni­als were sim­i­lar to the rep­re­sen­ta­tions that were the sub­ject of the ear­li­er pro­ceed­ings and that the com­pa­ny knew that these tes­ti­mo­ni­als (which were mis­lead­ing) had been post­ed on its wall. The Court accept­ed that the com­pa­ny was not respon­si­ble for the ini­tial pub­li­ca­tion of the third par­ty tes­ti­mo­ni­als. How­ev­er, it took no steps to have them removed. The Court made an infer­ence that the com­pa­ny did not take the steps to remove the tes­ti­mo­ni­als because it want­ed the ben­e­fit of the praise for its ser­vices or the legit­i­ma­cy of third par­ty tes­ti­mo­ni­als may have added to its business.

The com­pa­ny acquired respon­si­bil­i­ty for the mate­r­i­al post­ed on the wall at the point when it knew of those post­ings and decid­ed not or took no steps to remove them. Once the com­pa­ny was aware of the post­ings on the Face­book wall, it had the nec­es­sary means of con­trol to remove the con­tent and stop the tes­ti­mo­ni­als from being com­mu­ni­cat­ed to oth­er mem­bers of the public. 

Impli­ca­tions for business

The deci­sion makes it clear that any busi­ness that is using social net­work­ing, includ­ing pro­mo­tions through Face­book fan pages or oth­er means, must have process­es in place to mon­i­tor the con­tent of those sites, includ­ing mate­r­i­al post­ed by third par­ties, and exer­cise appro­pri­ate con­trol over con­tent that is mis­lead­ing or oth­er­wise in con­tra­ven­tion of any under­tak­ing or code of adver­tis­ing prac­tice or law.

For fur­ther infor­ma­tion about this top­ic, please con­tact Swaab Attorneys?.

Authored by M Hall.