Allergy Pathway operates clinics for the diagnosis and treatment of allergies. In 2009 the Australian Competition and Consumer Commission (ACCC), as competition regulator, formed the opinion that the way in which Allergy Pathway promoted its services in traditional media and on the web breached the Trade Practices Act 1974 (Cth) in the following ways: Allergy Pathway engaged in misleading or deceptive conduct (s 52); falsely represent that services are of a particular standard or quality (s 53(aa)); represent that services have benefits they do not have (s 53(c)); and engage in conduct that is liable to mislead the public (s 55A).
Justice Finkelstein in the Federal Court, accepted the claims of the ACCC and ordered Allergy Pathway to carry out corrective advertisement, including on “all websites which are owned, operated, controlled or maintained by or on behalf of” Allergy Pathway;[1] in addition a trade practices compliance training program was ordered to be implemented by the company. The matter should have ended there but for a later social media marketing campaign that included a YouTube video uploaded by the company, which was linked to FaceBook and Twitter posting by Allergy Pathway.
This marketing campaign ended up with the company facing contempt of court proceedings for breach of the 2009 orders. The outcome was that fines of $7,500 were imposed (the ACCC was asking for $10,000).
The YouTube video, FaceBook posting and Twittering by the company seem an uncomplicated claim, however part of the ACCC’s claim against the company was the posting by ‘fans’ on the Facebook wall and Twitter messages was the responsibility of Allergy Pathway and was part of the company’s contempt of the court orders.
In a February 2011 judgment Finkelstein J. describes the ACCC’s allegation as being that the contempt of the 2009 orders was made up of publications that were grouped into several categories: ‘(1) statements and links to statements posted by Allergy Pathway on its website and Facebook and Twitter pages and in a video posted on YouTube and embedded on its Facebook and Twitter pages; (2) testimonials written by clients and posted by Allergy Pathway on its website and Facebook and Twitter pages; (3) testimonials written and posted by clients on Allergy Pathway’s Facebook “wall”; and (4) Allergy Pathway’s responses to queries posted by members of the public on its Facebook wall.”[2]
Allergy Pathway conceded that most of the statements in categories (1), (2) and (4), breach the 2009 orders. The category (3) statements were the subject of argument before Finkelstein J. as to whether statements posted on the respondent’s Facebook and Twitter pages by others constitutes publication by Allergy Pathway. To restate part of the 2009 orders the company undertook not “make or publish or cause to be made or be published, in any internet website”[3] statements (set out in the judgment) that had been determined to breach the Trade Practices Act.
To determine whether the social media campaign was caught by this 2009 undertaking, Finkelstein J. considered cases from defamation law in order to focus on the meaning of the words “publish” and “make”. There are pre-internet cases on posting on walls of the golf club premises in England and the walls of lavatories in Texas bars, which put the responsibility on the person in charge of the premises to remove defamatory material, after it has been brought to their attention. I cover these cases in a 1997 article on defamation on the internet.[4]
Since that time there have been a number of internet cases that confirm, with regard to defamation law, that the person in charge of a ‘virtual’ wall has responsibilities to remove defamatory material, after it has been brought to their attention. Finkelstein J. commented that that Allergy Pathway had conceded that it “knew that persons had published testimonials on its Twitter and Facebook pages and that it took no steps to have them removed. I infer that one reason Allergy Pathway did not remove the testimonials was that it wanted to take the benefit of the praise for its services. Another possible reason is that Allergy Pathway thought the testimonials added legitimacy to its business.”[5] Applying the line of reasoning from the defamation cases Finkelstein J. concluded that Allergy Pathway became the publisher of the testimonials and “accepted responsibility for the publications when it knew of the publications and decided not to remove them”. [6]
The end result of the social networking campaign for the company was that it had to pay the fines, the full legal costs of the ACCC (on an indemnity basis) and carry out further corrective advertising on the front counter of its clinics, its website and Twitter and Facebook pages. Allergy Pathway was also required to send a letter (electronically or otherwise) to all of its customers explaining what has occurred.
What can be taken from this case is that for whatever media is being used – is that first you have to get the message compliant with Federal trade practices legislation[7] and the fair trading legislation of the States or Territories; the second take out from the case is the social media campaign has to be actively managed.
Any virtual ‘wall’ that customers can post to, must be edited to keep it on message and avoid statements that the ACCC or state or territory fair trading departments may jump on. Not all praise from customers is good news; such as if it acts to mislead other customers or potential customers (in way prohibited by trade practices and fair trading legislation).
If any messages act to misrepresent the products or services or otherwise are misleading or deceptive messages; then if they remain for a significant time on the virtual ‘walls’ set up as part of any social media campaign, the company responsible for setting up and managing the virtual ‘walls’ will be accepted as taking responsibility for the publishing of the misleading messages – which can have consequences as described above.
[1] ACCC v Allergy Pathway Pty Ltd [2009] FCA 960 (27 August 2009)
[2] ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 (10 February 2011) [8].
[3] ACCC v Allergy Pathway Pty Ltd [2009] FCA 960 (underlining added for emphasis).
[4] Morris Averill, ‘Defamation – The Internet & the World-Wide Web’, published in ‘Internet Law Anthology ‘, Prospect Publishing (1997).
[5] ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 [32].
[6] Ibid. [33].
[7] The Trade Pactices Act 1974 (Cth) has been superceded by the Competition and Consumer Act 2010 (Cth) but the obligations remain the same.
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