Facebook comments are subject to advertising standards: Australian regulator

Last week, Australia’s advertising regulator issued an intriguing enforcement ruling that is bound to have implications around the world.

Advertising lawyers say that Canada is likely to adopt an Australian ruling that Facebook comments are subject to advertising standards and must be vetted daily. (REUTERS)

The case involved a Facebook “fan page” created for Smirnoff vodka — the ubiquitous brand owned by Britain’s Diageo PLC. Devotees of the brand use the page, presumably, to tell Smirnoff stories and gush about their favourite vodka.

Those posts are great publicity for Smirnoff. They’re also, according to the regulator, tantamount to advertising — and therefore subject to advertising standards.

The upshot is that all companies in Australia must now regularly vet Facebook posts to ensure that fans aren’t making misleading or false statements about the company, an expense that could be prohibitive for smaller businesses.

Chris Watson, a partner at the law firm CMS Cameron McKenna in London, spoke to the Daily Telegraph when the story came out. He predicted that the ruling in Australia would be “the first of many” similar rulings around the world.

John Swinson, a partner at King & Wood Mallesons, said that a comment as simple as “Smirnoff is the purest Russian vodka” would leave Diageo liable on multiple counts:

“Smirnoff is Australian not Russian. So that is false. It may not be the purest so that could also be misleading.”

I contacted Peter Le Guay, an advertising lawyer in the Sydney office of Thomsons Lawyers, for his take on the matter. Le Guay says that the Smirnoff ruling merely solidifies what is already Australian law, based on the 2011 precedent in ACCC v Allergy Pathway Pty Ltd.

Peter Le Guay

In that case, the Australian Competition and Consumer Commission (ACCC) brought contempt of court proceedings against Allergy Pathway for failing to prevent its “fans” from making specific efficacy claims about its product.

It’s important to note that the company had complied fully with the ruling that prevented it from making those claims. However, Allergy Pathway did nothing to prevent its social media followers from doing so.

The court found that the company was therefore in contempt:

“While it cannot be said that Allergy Pathway was responsible for the initial publication of the testimonials … it is appropriate to conclude that Allergy Pathway accepted responsibility for the publications when it knew of the publications and decided not to remove them. Hence it became the publisher of the testimonials. In any event it is clear that it caused them to continue to be published from the time it became aware of their existence, which is enough to put Allergy Pathway in breach of the second limb of its undertaking.”

For the Smirnoff case, according to Le Guay, the advertising regulator referred to the definition of “Advertising or Marketing Communication” under the Australia Association of National Advertisers’ Code of Ethics:

“any material which is published or broadcast using any Medium or any activity which is undertaken by, or on behalf of an advertiser or marketer, and [1] over which the advertiser or marketer has a reasonable degree of control, and [2] that draws the attention of the public in a manner calculated to promote or oppose directly or indirectly a product, service, person, organisation or line of conduct”

Based on this definition, the advertising regulator reasoned that the Facebook comments did constitute advertising in that the company did have “reasonable control” over statements that were posted. Allowing those statements to be posted, in other words, constituted an endorsement.

Le Guay says that, while the ruling may seem over-the-top by today’s standards of digital media openness, it’s actually just a common-sense interpretation of basic advertising law:

“Advertisers and companies need to understand that their branded Facebook page is akin to the old fashioned bulletin board. … They are responsible for what is posted on it.”

Le Guay doesn’t suggest that companies should be responsible for vetting a social media comment before it’s posted, but a reasonable effort must be made to remove it if it’s misleading or false. (Indeed, the Australian Competition and Consumer Commission has already stated that it would come down hard on companies that allow misleading posts to remain on their Facebook page for 24 hours.)

“In the instantaneous world of the internet, I do not think that checking the site every day is unreasonable.”

As for implications on this side of the Pacific, Le Guay says it’s likely that, in Canada at least, advertising regulators will take a stance that’s similar to the one in Australia — but he’s not so sure about how it will all play out in the U.S.

“… because of the US’s view on freedom of speech, there may be some argument that could be raised that making an advertiser liable for a third party’s comments on its Facebook page somehow negatively affects the right to free speech. I think the Canadians, as opposed to the Americans, are more likely to follow the Australian position.”

All in all, though, Le Guay says this will not hamper Facebook, and that companies — larger ones, at least — will simply see it as a cost of doing business.

-David Dias

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