How to avoid misleading customers on social media: Australian Consumer Law Update

Social media is a modern business tool used by large and small businesses to interact with potential customers, and promote their products and services. However, it is crucial to ensure that you pay close attention to the content of your social media posts in order to comply with consumer legislation. The ACCC has recently issued new social media guidelines for businesses which clearly state that businesses have the same responsibilities on social media as they do in all other marketing channels.

Making misleading claims on social media

There are no specific or different consumer laws in place for social media. As a result, the usual consumer protection laws apply to prohibit businesses from making false, misleading or deceptive claims about their products or services.

The ACCC website provides two examples of how social media can be mismanaged:

  1. “XYZ Pty Ltd tweets that they are the first Australian company to offer a 100 per cent environmentally friendly car wash service when they have not done any research to support this. It turns out GHI Pty Ltd has offered the same service for many years. The tweet is likely to be false, misleading or deceptive.”
  2. “ABC Pty Ltd pays a celebrity to tweet that she loved staying at one of ABC’s resorts. The celebrity has never actually been to this resort. This tweet is likely to be false, misleading or deceptive.”

Case Study: ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74

This recent case shows that businesses can also be held liable for comments by third parties on their Facebook and Twitter pages.

In early 2009, the ACCC commenced legal proceedings against the company for misleading customers in its claims that it could treat allergies using a “muscle strength indicator technique”. The claims were made on Allergy Pathway’s website, its Facebook and Twitter pages, as well as in advertisements on radio, in newspapers and in brochures distributed to clients.

The Federal Court ordered that Allergy Pathway and its sole director pay fines, undertake corrective advertising, and commit to ongoing compliance training. In addition, the company and director undertook not to make, publish or cause to be made or published statements that represent that either of them could test for and cure allergies using the technique, or that it would be safe to have contact with the allergen after treatment by Allergy Pathway.

In subsequent proceedings, the ACCC took further action by alleging they had breached their undertakings on its website, Facebook and Twitter pages. Allergy Pathway conceded that most statements breached its undertakings except for testimonials written by clients and posted by clients on their Facebook wall. The Court ultimately found that Allergy Pathway had become the “publisher” of the testimonials because it knew of the posts that their clients had posted and decided not to remove them.

This case demonstrates that businesses must ensure the accuracy of content they themselves publish on their websites and social media sites, but also ensure that they remove any misleading content posted by third parties as soon as they become aware of it.

Monitoring social media

Businesses must be aware that social media operates 24 hours a day, seven days a week, and many consumers post outside normal business hours and on weekends. Businesses that fail to remove false, misleading or deceptive content from their accounts in a timely manner may face regulatory action. It is also important to note that while you can respond to comments instead of removing them, it may be possible that your response may not be sufficient to override the false impression made by the original comments. As a result, it may be safer simply to remove the comments.

Tips for businesses

It is important that businesses comply with consumer legislation by:

  1. Treating all social media posts as you would any other form of advertising;
  2. Being prepared to react within 24 hours if issues arise in posts to your social media accounts;
  3. Being clear and open in your use of online influencers, e.g using #ad to demonstrate paid posting.

Want to know more about Australian Consumer Law? Please don’t hesitate to contact our experienced Newcastle commercial lawyers at Butlers Business and Law on (02) 4929 7002 or fill out an enquiry form on our website.

Image: ‘Social Media Apps’ by Jason Howie available at Flickr under a Creative Commons Attribution 2.0.