A recent case in the Federal Court which held a company responsible for claims made in testimonials that its clients posted on its Facebook wall.
In 2009 the ACCC had brought an action alleging that Allergy Pathway had engaged in misleading and deceptive conduct, falsely represented goods or services were of a particular standard or quality and represented that its services had benefits which they do not have by making certain statements about its allergy services in marketing brochures and a variety of other publications. The respondents didn’t contest these allegations and, to avoid permanent injunctions, offered up undertakings to the Court committing to refrain from “making or publishing or causing to be made or published in any internet website, radio, television or newspaper advertisements or brochures or other written promotional material” statements representing that:
- it could accurately test for and identify an allergen for a person;
- it could cure or eliminate or successfully treat any allergy or allergic reaction;
- its treatments were safe or low risk; or
- after its treatments it would be safe for a person to have contact with the allergen to which the person had an allergic reaction.
The undertakings were given by the company and by the sole director of the company, who was taken to have been “involved” in the contraventions.
The ACCC in these proceedings alleged that the respondents were in contempt because they had breached the undertakings by making several categories of objectionable publications, including in:
- testimonials written by clients and posted by Allergy Pathway on its website, on its Facebook wall and on its Twitter page; and
- testimonials written and posted by clients on Allergy Pathway’s Facebook wall.
The respondents conceded that statements and links to statements which the company itself posted breached the undertakings. The Court had to determine whether Allergy Pathway and its director were similarly in contempt for allowing misleading statements posted by independent individuals on the company’s Facebook wall or Twitter page to remain there after the company became aware of the comments.
The respondents had said that the breaches were not deliberate, and that they thought they would not breach the undertakings by publishing the views of Allergy Pathways’ clients provided that they removed extravagant claims or words. However, they accepted that their approach to moderating their Facebook fans’ and Twitter followers’ testimonials was insufficient.
Finkelstein J held that the company and its director were in contempt because of these Facebook and Twitter statements. Key factors in the determination were that Allergy Pathways knew the statements had been posted on its Facebook wall / Twitter page and took no steps to remove them and if Allergy Pathways had made the statements itself it would have been in breach of the undertakings.
Finkelstein J said:
“While it cannot be said that Allergy Pathway was responsible for the initial publication of the testimonials (the original publisher was the third party who posted the testimonials on Allergy Pathway’s Twitter and Facebook pages) it is appropriate to conclude that Allergy Pathway accepted responsibility for the publications when it knew of the publications and decided not to remove them. Hence it became the publisher of the testimonials. In any event it is clear that it caused them to continue to be published from the time it became aware of their existence, which is enough to put Allergy Pathway in breach of the second limb of its undertaking [i.e. causing to be made or published].”
Each respondent was fined $7,500. Injunctions for 3 years were made and the court made declarations of breach, corrective advertising and costs.