How Does Defamation Apply to Marketplaces?

Many marketplaces provide users with a platform to leave reviews, discuss issues, ask questions and seek advice from other users. If you are a new or soon-to-be marketplace operator, ensure you understand how the law of defamation applies. Otherwise, if users post defamatory content, you might be vicariously liable as the publisher. Below, we revisit the law of defamation and how marketplace operators can protect themselves. 

The Law of Defamation

Defamation is the communication of a false statement about a person or business that contains insulting material. To sue a person for defamation, the defamed person must prove that the defamatory statement was:

• published to a third party
• identifies the defamed person, and
• contains defamatory matter.

The defamatory statement must be in writing or published and does not need to mention the defamed person specifically. 

A publication will be defamatory if ordinary members of society would think less of the defamed person. It could be something which harms the person, their reputation or their business. It also needs to be untrue, as one of the most common defences to a defamation claim is that the statement is substantially true.

What Can a Marketplace Operator Do?

As a marketplace operator, it’s important to take steps to reduce the likelihood of users posting defamatory content on your platform, including in reviews and forums.

Terms and Conditions

Ensure you have a comprehensively drafted set of terms and conditions. You should require the user to read and click to accept the terms. If possible, record their acceptance should you need to prove this later.

The terms and conditions should state that a user warrants or promises not to post material that is defamatory to your marketplace, including any review or forum. Each user should warrant that any comment or review is true and is an honestly held opinion.

Manage your risk by reserving the right to delete posts you consider defamatory and remove a user who posts defamatory comments. Although your terms and conditions should state that you are not responsible for content published on reviews and forums, note the ACCC’s recent guidance for marketplace operators on this point.

Practical Steps

It is prudent to set up the marketplace so that only people or businesses who have actually purchased from or sold to a user, can post a review. This helps ensure that any review is true and is an honestly held opinion, both defences for defamation.

Report Post Buttons

Give your users the ability to report defamatory comments on reviews or forums. That way, your users can assist to detect problematic comments including those which may contain defamatory statements.

Be Proactive

If you are made aware of statements which could be defamatory, you should delete them promptly. In the recent case of Duffy v Google Inc [2015] SASC 170, the South Australian Supreme Court held that after Google had been notified of Google search results containing defamatory material, the search engine could be considered a secondary publisher. This is because the continuing publication was the result of human action/inaction rather than machine operation.

Key Takeaways

Many online marketplaces include forums that allow users to communicate and post comments. Web hosts and forum facilitators can be held responsible for defamatory comments posted on forums, particularly once the platform operator has been notified that material is defamatory. You should be proactive in protecting yourself, and take the following steps:

• Have a robust set of terms and conditions in place, where users warrant their statements are true and/or an honest opinion, prohibits users from posting defamatory comments and gives you the right to delete defamatory comments. 
• Include a simple way for users to report defamatory posts.
• Delete defamatory posts promptly. 

If you need assistance drafting a set of terms and conditions for your marketplace, get in touch with our online business lawyers on 1300 544 755.