Social Networks Are Ads – ACCC


In Defamation By A Thousand Likes my colleague Paul Farrell recently contemplated the perceived threat to free speech posed by uncertainty over legal liability for user comments on social media sites. However, thanks to the Advertising Standards Board (ASB) and the Australian Competition and Consumer Commission (ACCC), some of this uncertainty has now been resolved.

In two determinations released to the public last week, the ASB found that comments and other user-generated content appearing on a business’ Facebook fan page were ads for the purpose of advertising regulations.

And now the ACCC has indicated that a similar approach would be adopted towards user-generated content when applying consumer protection laws.

In considering two separate complaints concerning the Facebook fan pages for Victoria Bitter and Smirnoff vodka, lodged under the Advertiser Code of Ethics and other advertising standards codes, the ASB found that advertisers who operated commercial Facebook fan pages were responsible for the comments of fans or other users. (The complaints, it is now reported, were made by academics from a Queensland University as part of a research project on the application of advertising codes.)

It was claimed that the VB fan page contained materials that promoted sexism, racism and other forms of discrimination or vilification, especially of homosexuals, in breach of advertising codes. In response to the question "Besides VB what’s the next essential needed for a great Australia Day BBQ?" users posted comments such as "racial tension", "cocaine and strippers", "sluts", and "big titted women". Others went much further. The ASB found that these comments were in breach of standards that proscribe ads that are offensive or discriminatory, or that are "exploitative and degrading of any individual or group of people".

The Smirnoff fan page breached advertising standards, it was alleged, by promoting irresponsible and under-age drinking of alcohol and contained material that connected alcohol consumption with sexual or social prowess. These claims were found to be unsubstantiated and were dismissed.

However, in both matters the ASB found that the Facebook fan page of an advertiser was a marketing communication tool used to promote products "over which the advertiser has a reasonable degree of control". This was not entirely unexpected. What did come as a surprise to some was that the liability of advertisers applied to material or comments posted by users or fans as well as content generated directly by the advertiser. It would seem that user comments are to be seen as commercial endorsements.

It’s worth noting here that these decisions are consistent with the approach adopted by the Federal Court in ACCC v Allergy Pathway Pty Ltd, where, in action for contempt of court, the defendant company was found to be in control of and responsible for comments posted by users on its fan page.

In 2011, 14 per cent of small businesses, 25 per cent of medium-sized businesses and 50% of large businesses in Australia had a presence on at least one social network, mostly Facebook. Social networks are being used to expand an business’ reach through the growing of brand awareness and engagement with current and potential customers.

Fan pages not only allow for businesses to spruik their product but it facilitates "satisfied customer" endorsements. It has become the new way to promote through word of mouth. So what do these decisions mean for advertisers?

It is likely that most businesses with fan pages will need to reconsider their social networking strategies. Ensuring compliance with advertising standards and consumer laws will mean businesses that allow user comments on their fan page will have to moderate all posts to ensure compliance with advertising standards and consumer laws.

But is this "burden" unreasonable?

The decisions of the ASB have been criticised for imposing an unrealistic burden on businesses. The Interactive Advertising Bureau, representing online advertisers, has warned that these decisions will have a profound effect on the way businesses use social media and hurt its development, although Alina Bain from the Australian Association of National Advertisers has been quoted as saying that advertisers accept they have a duty to regulate comments on fan pages.

Some of the (over)reaction to the decisions may have arisen from the vagueness of the ASB’s published reasons. While they made it clear that businesses were responsible for user comments posted on fan pages no indication was given on whether liability would attach as soon as the comments were posted or whether there would be a reasonable time allowed for unsuitable posts to be removed.

If liability was to attach immediately businesses would be forced to monitor and moderate all posts prior to publication, adding to the costs of operating a fan page. This may make having a Facebook presence too costly.

However, the ACCC has made it clear that it would expect compliance within a reasonable time, allowing for businesses to monitor posts and remove those found to be in breach of laws or standards. This is consistent with the position regarding liability for user comments posted online that has been adopted in other areas of the law and with the decision in the Allergy Pathways case.

Although there have been claims that making businesses responsible for user comments goes against the spirit of social networks and imposes an unreasonable burden on freedom of expression, these arguments carry little weight.

Facebook is not a regulatory free zone, where users are free to say what they please. Facebook itself imposes restrictions on what can be posted, as was seen last week with the removal of the "Aboriginal memes" page for breaching their terms and conditions. And, although still a developing area of the law, it is becoming clearer that Facebook and other social networks accept that content hosted by them is subject to national laws.

Businesses have been keen to take advantage of social networks where a national, or even international, audience can be reached for minimal costs. The cost of doing business online has just become a little costlier.

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