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A steadily increasing number of businesses have an active social media presence. A report by Sensis, published in May 2015, noted that around 33% of Australian businesses have a social media presence, compared with 68% of Australian consumers. The laws regulating what businesses can and can’t do when marketing their products have adapted to reflect advertising shifting to Facebook and Twitter.

A Swimwear Folly

The case of Madden v Seafolly [2014] FCAFC 30 is a clear example of the how marketing and consumer laws will apply to advertising on social media. In that case, the owner of a small swimwear company (Madden), posted comments on her personal Facebook page suggesting that a larger company (Seafolly) had copied her designs. These comments, as it turned out, were false.

As discussed in one of our other articles, section 18 of the Australian Consumer Law prohibits a person from engaging in misleading or deceptive conduct “in trade or commerce”. One of the key questions in Madden v Seafolly was whether the misleading Facebook posts were made “in trade or commerce”.

The Full Court of the Federal Court of Australia upheld the primary judge’s conclusion that Madden’s posts were made in trade or commerce because they were made by the principal of a business, related to a competitor’s business activities and sought to influence customers. The Full Court also noted that the comments were made under the principal’s name, as well as that of the business, and that many of the other comments on the page were from participants in the fashion industry.

The Regulator Weighs In

The regulator in this area, the Australian Competition and Consumer Commission (ACCC) has also weighed in, making its view clear that a business’ marketing and promotional activities on social media channels will be subject to the same scrutiny as traditional forms of advertising.

The ACCC also points out that a business may be responsible for misleading comments posted by others on the social media pages of the business. So, for instance, if you sell bicycle tyres and a customer posts an incorrect comment saying that your product has twice as much grip as a competitor’s tyres – you may be responsible if you are aware of the post and don’t take it down.

How to Manage Your Social Media

The ACCC’s advice is that businesses should monitor their social media pages and remove misleading posts as soon as they become aware of them. This, of course, may be easier said than done. It can be difficult to determine just how much effort a business should put into managing their social media and weeding out misleading comments.

Thankfully, the ACCC also provides some practical guidance:

  • If your business has 300 staff, the ACCC will expect that you have the systems and resources to detect promptly and remove misleading posts.
  • Similarly, if your business has only ten staff, but 50,000 friends on Facebook, the ACCC considers that the potential risks to consumers of a misleading post are high. So, these posts should be removed in a short space of time.
  • On the other hand, if your business has 12 staff and 80 friends on Facebook, the ACCC would not expect you to monitor your social media pages rigorously and remove posts as quickly as the other two companies.

As the ACCC notes, if you are unsure about what your business can or can’t do on social media, you should seek legal advice. At LegalVision, our lawyers can help you understand how to promote your business on social media channels without running into trouble with the ACCC.

Questions? Get in touch on 1300 544 755.


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