Liable for Misleading Testimonial on Facebook and Twitter

Federal Court has held a company and its sole director responsible for statements made by third parties on its Facebook and Twitter pages; a ruling with significant implications for businesses which market themselves using social network media.

It also emphasizes the divergent approaches Australia and the United States have taken to attributing liability for comments posted on a business’s social networking site. The judgment, which Finkelstein J had given down on 10 February 2011. The proceedings trailed an earlier action the ACCC had taken against Allergy Pathway and Keir; The court found Allergy Pathway and Keir had engaged in misleading or deceptive conduct in contravention of the Trade Practices Act 1974

Allergy Pathway runs clinics purportedly for the diagnosis and treatment of allergies; however their technique has not been medicinally validated. Early 2009, the ACCC commenced proceedings against Allergy Pathway concerning its representations in various publications that: it could test for allergens; it could eliminate all allergies or allergic reactions; it could successfully treat allergies; its treatments were safe or low risk; and after receiving Allergy Pathway’s treatment, it would be safe for people to have contact with the substance or allergen to which they had previously had an adverse reaction.

Satisfied with expert evidence tendered by the ACCC, the Court found Allergy Pathway had contravened the Act and that Keir had been knowingly involved in the contraventions.

Finkelstein J found that while Allergy Pathway was not responsible for the initial publication of the testimonials, it had assumed general responsibility for the postings knew of the postings: had power to remove them: and took no steps to take them down. His Honor inferred that Allergy Pathway did not remove the testimonials because it wanted the benefit or the praise for its services and/or the legitimacy the testimonials might have added to its business.

With the widespread use of social media as a marketing tool, Allergy Pathway is a significant decision; it closes a potential loophole which would have allowed unscrupulous traders to take all the benefit from, but none of the responsibility for false, misleading or deceptive comments posted to their social networking pages by third-parties. In tying-off that loophole, the decision ensures a greater level of protection for the consumers who are targeted by social media advertisements.