Ain't no (Facebook) friend of mine - when are you liable for what others say about you?

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 statements.

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 undertaking. 

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 Facebook.

 

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.

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 careful.

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.