Australian Competition and Consumer Commission chair Graeme Samuel says companies will be held responsible if they do not delete or respond to false, misleading and deceptive testimonials on Facebook or Twitter.

The comments follow the Federal Court’s decision to fine an allergy products company and its director $7500 for allowing false and misleading testimonials to be published on its commercial Facebook and Twitter pages.

The company, Allergy Pathway, and director Paul Keir accepted Federal Court orders in 2009 after the ACCC took action over false and misleading statements the company made about its ability to identify and eliminate allergies.

Part of the orders the company was forced to accept that the business would not “for a period of three years … make or publish or cause to be made or be published, in any internet website, radio, television or newspaper advertisements or brochures or other written promotional material” similarly false statements about the company.

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But Federal Court judge Justice Ray Finkelstein found the company to be in contempt of those orders after the ACCC discovered “representations” from the company, including testimonials written and posted by clients on Allergy Pathway’s Facebook wall and on the company’s website and Twitter pages.

“While it cannot be said that Allergy Pathway was responsible for the initial publication of 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 them and decided not to remove them,” Finkelstein said in his judgment.

“Hence it became the publisher of the testimonials.”

The ACCC told SmartCompany this morning that the case is the first it has dealt with involving social media. In a statement, Samuel delivered a stern warning to all companies with a presence on social media.

“Many corporations now use Facebook ‘Fan’ pages and Twitter accounts to promote their businesses. This outcome confirms that any business that decides to leave public testimonials or other comments on their Facebook and Twitter pages will be held responsible if they are false, misleading or deceptive.”

Philip Argy, a lawyer who specialises in technology matters and runs, says the lessons from the case may not have as wide an application as Samuel suggests, given the context of a very specific set of orders made by the Federal Court in the original case against Allergy Pathway.

Nonetheless, he says the unusual case does demonstrate that regulators and the Federal Court — where Argy jokes many judges “wouldn’t know the difference between a megabyte and a mozzie bite” — are now coming to terms with the world of social media.

“I’ve always railed against the mistaken belief that somehow the law doesn’t apply to what you do on your website and your Facebook page,” Argy says. “If it’s your official, corporate Facebook page, then plainly you are the moderator of it.”

He gives the example of a knife company, which receives a post on its Facebook page from a customer claiming the company’s knives can cut through steel.

“If it’s false and you do not delete it or respond, then you have adopted publication of that post and you are liable for it,” he said. “If you say ‘thanks for the testimonial but that’s not true’ then clearly you have not adopted it.”

Argy does point out that while deleting comments on a Facebook page is relatively easy, monitoring and then deleting or responding to false and misleading comments on Twitter could be much more difficult — particularly as any response a company makes would be not shown adjacent to the Tweet in question.

A court would therefore need to be satisfied that the company been aware of the Tweet (which could be possible if the company was using a Twitter client such as Tweet Deck) and had not made efforts to respond. In addition to the fine, Allergy Pathways and Peter Keir were ordered to pay the ACCC’s costs.

*This story first appeared on SmartCompany

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