Paid advertising is old news. These days it’s all about earned media. That is, news coverage and shares on social media. Everyone wants to go viral.

But as far as the courts are concerned, advertising is advertising and misleading conduct laws still apply. Swimwear designers Seafolly and Leah Madden found this out the long, hard, litigious way.

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The case effectively expands the potential for misleading or deceptive conduct claims arising from Facebook posts. Here’s why.It started when Madden posted images and comments on her personal Facebook page suggesting that competitor label Seafolly (right) had copied her designs (left). Seafolly retaliated with a press release saying Madden was wrong, and was acting maliciously. The fight got ugly and they wound up in court. After an appeal, they were both on the hook for misleading or deceptive conduct.

  • The prohibition on misleading or deceptive conduct normally only applies to companies. This case says that the prohibition can also apply to individuals acting on the internet.
  • The prohibition applies to conduct ‘in trade or commerce’. Madden’s conduct in posting about Seafolly on her personal Facebook page (not her business’s page) was ‘in trade or commerce’. This was because the posts sought to influence potential Seafolly customers, had a commercial character and not a private character, and many of her personal Facebook contacts were also business contacts.
  • The case confirms the principle that a statement of opinion can amount to misleading or deceptive conduct, if it’s not honestly held or is recklessly formed.

What’s really interesting about this case is the blurring of lines between private and business social media use. In practical terms this happens all the time. It’s important to understand that there can be serious legal implications even when you’re blogging in pyjamas.