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Risks, rewards and retweets Social media, marketing and the law

Feature Articles

Cite as: March 2014 88 (03) LIJ, p.46

In Australia in 2014 almost every major marketing promotion will include “social” elements. Here we answer marketers’ top social media law FAQs. 

By Paul Kallenbach, Claire Kowarsky and Nicole Reid

What special rules apply when running promotions via social media?

In an unrelenting and competitive consumer environment, organisations are increasingly offering tantalising prizes and incentives in order to engage and grow their social media fan base.

Marketers need to know what they can lawfully do when conducting promotions on social media, including the extent to which they can “push the envelope”. The usual regulatory requirements for running promotions apply to the online world (including the Competition and Consumer Act 2010 (Cth) and the trade promotions legislation in each state and territory), however marketers must also consider the terms of service of each social media platform being used. There is little or no scope to negotiate these terms. Moreover, social media platforms will usually reserve the right to take down a page or terminate a user’s account if it considers a user has acted in breach of the platform’s terms. This, in turn, may have dire consequences for their brand.1

Set out here are some practical tips for conducting promotions on popular social media platforms.

Twitter

To ensure that all competition tweets are properly captured, it is usually not sufficient to require that only a #hashtag be included with entries. To be prudent, it is recommended both a #hashtag and @handle be required in the entry. Moreover, the required #hashtag should be as original as possible, as this will help to ensure that all entries can be tracked.

Since tweets are limited to 140 characters, incorporating a long hyperlink to the promotion’s terms and conditions may not be practical so organisations should consider using Twitter to automatically shorten links or a URL abbreviation service such as bit.ly or tinyurl.com which allows for better tracking and reporting.

The guidelines for contests on Twitter2 provide that it is not acceptable to encourage duplicate updates (for example, by stating that “whoever retweets the most wins”), so marketers should ensure that the contest rules encourage original and unique tweets.

Facebook

On 28 August 2013, Facebook announced a significant change to its promotions terms.3 It is no longer a requirement that Facebook promotions be run via a separate app. Instead, promotions can now be administered on page timelines (as well as via apps). Businesses can also utilise the ‘like’ button as a voting mechanism, and promotions can accept entries via liking, commenting on, posting on or messaging to a Facebook page.

Pinterest

Pinterest4 recently took steps towards commercialising its platform and offerings. On 19 September 2013, CEO Ben Silbermann announced that Pinterest would include “promoted pins” (in effect, advertisements) on the Pinterest platform. How this change will impact on trade promotions remains to be seen. Although steadily growing in popularity in the US,5 promotions on Pinterest are far less prevalent in Australia. Promotions that are run via Pinterest must comply with an extensive set of platform specific rules, including not requiring a minimum number of pins and not encouraging “spammy” behaviour by asking participants to comment on pins.

What are the risks of inviting third party content?

An important element of marketing using social media is interacting with consumers and other stakeholders by inviting them to post content and responding to it. While organisations can control who posts content on their behalf, it is more difficult to control content posted by third parties. Nevertheless, this content can still give rise to legal risks for the organisation.

Legal risks

The Federal Court’s decision in Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2)6 is illustrative of the legal risks that can arise with third party content on social media platforms.

Allergy Pathway Pty Ltd and its director were found guilty of contempt of court for breaching undertakings given to the Australian Competition and Consumer Commission (ACCC) not to publish representations about its allergy treatment products that were similar to those which had earlier been found to be misleading or deceptive. The conduct that amounted to contempt of court was that the company was aware that third parties had posted testimonials to Twitter and Facebook containing misleading representations, but failed to remove them.

A similar position to that adopted by the Federal Court was taken by the Advertising Standards Bureau in determining that certain content posted to Facebook pages breached the Australian Association of National Advertisers’ Code of Ethics, even though the offending content was posted by users rather than the advertiser.7 This was on the basis that each advertiser had a reasonable degree of control over its Facebook page and that the pages were used as marketing communications to engage with customers, including direct questions that invited responses from customers on the pages.

In addition to liability for misleading or deceptive conduct, third party content on an organisation’s social media pages can result in the organisation being found liable for, amongst other things, defamation (if defamatory content is considered to have been published by the organisation), copyright infringement (if material that infringes third party copyright is posted to social media without the copyright owner’s consent and the organisation is found to have authorised that copyright infringement), breach of confidence, breach of the Corporations Act 2001 (Cth), and breach of criminal and other laws relating to offensive content.

How to mitigate these risks

An organisation actively using and engaging with users of its social media pages may be found to have engaged in misleading or deceptive conduct, published defamatory material or authorised copyright infringement if it fails to remove (or seek the removal of) offending content in a timely manner. Organisations should put in place an appropriate system to moderate user generated content, either regularly and pro-actively, or on an ad hoc basis, in response to complaints. This system should address the prompt and efficient removal of objectionable or unlawful material content.

Organisations can also attempt to limit liability by putting in place terms and conditions that apply to users who post content to the organisation’s social media pages. Such terms should be adequately brought to the attention of users prior to posting content in order to maximise the likelihood of those terms being enforceable. However, if an organisation does not take any steps to enforce those terms, they may be of little assistance in defending a legal claim. The terms of service of the particular social media site (if it is a third party site) may also impose obligations on users, and organisations could also rely on those terms to seek removal of problematic content.

As the law in these areas continues to evolve in relation to liability for user generated content, it may be that the extent of an organisation’s liability depends on the particular legal issue that arises. This means that organisations will need to continually be aware of developments in the law, and review and update their social media policies and practices over time.

Can others copy content from social media?

One risk of posting content online is that others may copy that material, with or without changes, and use it for their own purposes. This is reflected in the outcry that arose when Facebook and Instagram changed their terms of service to expand their rights to use content posted by users without the users’ specific consent.8

Use by the social media operator

Organisations should ensure they are aware of the terms that apply to the sites where they post content. The terms of service of the various popular social media sites each require users to grant to the operator licences of content they upload to the site. The scope of the licence may be limited to users connected with the site itself (for example, under Pinterest’s9 and YouTube’s10 terms), but can be much broader than this (e.g. the terms of Facebook,11 Twitter12 and Instagram13). It is prudent for organisations to keep themselves informed about the terms that apply to all social media channels used by the organisation, and take this into account when posting (or soliciting) any content that could potentially have commercial value or be misappropriated.

Use by third parties

The breadth of the licence granted to a social media site operator does not necessarily mean that other users have the right to use content taken from social media unless they have been granted a sub-licence from the operator. This was highlighted in a recent US decision concerning the publication by newspapers of photographs that had been obtained from Twitter without permission.14

Despite having a limited (or no) licence to use such content, unscrupulous or uninformed users may do so without permission if it is easy to copy. Moreover, if an organisation’s content is reproduced without consent, it can be very difficult in practice to prevent it spreading throughout the internet, as seeking removal of the content from one site may simply result in it being posted to others.

What can I do about untrue or unfair reviews?

Untrue or unfair reviews are sometimes placed about a business on consumer review sites or other social media. After identifying online reviews and false testimonials as a compliance and enforcement priority, in December 2013 the ACCC released a best practice guide in respect of online reviews and review platforms.15

Be proactive

Businesses interested in their online reputation need to take a proactive approach to social media – and there are some useful tools available online to help monitor what is going on with organisations’ brands and customers including Hootsuite, Klout and Tweetreach.

A simple approach to reducing the risk of cybersquatting or fraudulent use of brand assets is to get in first. If a business has a new brand that it wants to market via social media, it should register that brand on all of the social media platforms it plans to use before someone else does. There is generally no fee to register a name or handle on a social media platform, and most platforms will not permit more than one user to have a particular page name or handle.

A proactive approach also means dealing with complaints and issues, not ignoring them. In September 2013 a frustrated mother posted a complaint to Facebook about Coles branded nappies. The post was shared more than 35,000 times in 24 hours. She claimed that she had called Coles twice to complain about the nappies, and that her complaint was not taken seriously until she took to Facebook.16

Furthermore, taking down negative posts has been shown on many occasions to spark heated social media backlash and scrutiny. A good example of this was in December 2013 when Melbourne cycling retailer Total Rush posted via Twitter an image of scantily clad bodypainted models who were part of an event to relaunch its Richmond store. The image was quickly removed in response to consumer objections (although it is still widely available on the web), but when it emerged that Total Rush was deleting negative comments, there was a further flurry of social activity leading to the incident receiving wide social and mainstream media coverage.17

The risk of significant brand damage via social media can be mitigated by taking an empathetic approach to customer complaints, as well as adopting clear communication lines and strategies between legal, corporate affairs and consumer relations functions to ensure issues are dealt with in an appropriate and timely manner.

Legal avenues

If someone says something nasty, disparaging or unfair about a business on social media, what can the organisation do about it from a legal perspective?

Who to sue?

One of the biggest problems is who to pursue. The poster may be anonymous and the platform on which the post is made may be hosted overseas. If the platform is hosted locally, a claim can be made against the entity hosting the website. Alternatively if the business can identify the person who posted the offending comment, it can make a claim against them personally. If the owner of the site or the poster cannot be located, it may also be possible to pursue the internet content host who hosts the website. However, all of these things take time and cost money. Moreover, a heavy-handed approach runs the risk of creating further negative publicity for the organisation involved.18

Misleading or deceptive conduct

The Australian Consumer Law’s prohibition on misleading or deceptive conduct is a powerful tool with which to deal with persons who deceive or misinform people about brands. In Seafolly Pty Ltd v Madden (Seafolly)19 the designer of the White Sands swimwear brand, Leah Madden, erroneously formed the view that swimwear brand Seafolly had misappropriated her designs. She took to her Facebook page to vent her frustration, posting images of White Sands swimwear next to pictures of Seafolly Swimwear underneath the heading, “The most sincere form of flattery?”. The Federal Court held that she had engaged in misleading conduct and ordered her to pay damages and costs to Seafolly.

Defamation

Tweets and Facebook posts are not immune from the reach of defamation laws. A social media post or a tweet complaining about a brand that goes viral or reaches a particular group defined by a common interest can have a significant and detrimental impact on the online reputation of the person or business. Every person engaging with social media is a potential publisher and is subject to the laws of defamation (although there are constraints around a company’s ability to take action for defamation in some circumstances, particularly if they have 10 or more employees). For example, in 2011, author and media personality Marieke Hardy incorrectly named Joshua Meggitt as the author of a hate blog about her. She tweeted her false allegation to more than 60,000 Twitter followers. Hardy ultimately reached a confidential legal settlement with Meggitt and published a retraction and apology on her blog.20

Injurious falsehood

To establish an injurious falsehood claim, a plaintiff must prove that:

  • there was a false statement concerning its business;
  • the false statement was published to a third person;
  • there was malice on the part of the defendant; and
  • the plaintiff has suffered actual loss.

In the Seafolly case, Seafolly’s injurious falsehood claim failed because, although it could establish the first three elements of the tort, it could not adduce evidence of pecuniary loss flowing from Ms Madden’s false statements. However, in Australia, there is at least one example of this cause of action succeeding in the social media sphere, when a plaintiff gained an injunction to prevent the defendant from maintaining a blog, entitled www.hunterholdensucks.com.au, which criticised the plaintiff’s business.21

Breach of advertising standards

In the United Kingdom in 2012, three businesses complained to the UK Advertising Standards Authority (ASA) that claims by TripAdvisor such as “reviews from real travellers” were misleading, because TripAdvisor did not verify reviews on its site. The ASA ruled that TripAdvisor must not claim that all contributions on its pages were real.22 While there is yet to be a similar ruling in Australia, the decision demonstrates the growing concern among businesses as to the influence wielded by TripAdvisor and other popular social media platforms, and the potential consequences arising from negative or misleading reviews on those platforms.



Paul Kallenbach is a partner at Minter Ellison. He is an internationally recognised expert in technology law and is a frequent commentator, platform speaker, author and guest lecturer on a wide range of legal and commercial issues across the technology sphere. Nicole Reid is a senior associate at Minter Ellison where she has gained extensive experience in commercial law matters, as well as specialist expertise in commercial intellectual property. Claire Kowarsky is an in-house lawyer at Lonely Planet. An experienced marketer turned lawyer, Claire was previously a solicitor at Kelly Hazell Quill Lawyers where she advised on some of the biggest social media promotions and campaigns in Australia. Claire was awarded the 2013 LIV “Rising Star of the Year Award”.

1. According to “The Cool Hunter”, its Facebook page which had 788,000 Facebook fans was disabled in August 2012 for repeated IP infringements: see http://www.thecoolhunter.com.au/article/detail/2126/when-facebook-disables-your-fan-page.

2. See https://support.twitter.com/groups/56-policies-violations/topics/237-guidelines/articles/68877-guidelines-for-contests-on-twitter#.

3. See https://www.facebook.com/page_guidelines.php#promotionsguidelines and https://www. facebook.com/facebookforbusiness/news/page-promotions-terms.

4. See http://about.pinterest.com/use/.

5. See for example http://www.pinterest.com/sweepslovers/pin-it-to-win-it-pinterest-promotions/.

6. [2011] FCA 74. See also John Fogarty, ‘Beware the Social Network’ (2011) 85.8 LIJ 37.

7. Advertising Standards Bureau Case Report – Fosters Australia, Asia & Pacific (http://ms.adstandards.com.au/cases/0271-12.pdf); Advertising Standards Bureau Determination – Diageo Australia Ltd (http://ms.adstandards.com.au/cases/0272-12.pdf).

8. See, e.g., “Facebook Privacy Change Sparks Federal Complaint”, PC World, 17 February 2009 (http://www.pcworld.com/article/159703/facebook.html) and “Instagram says it now has the right to sell your photos”, CNET, 17 December 2012 (http://news.cnet.com/8301-13578_3-57559710-38/instagram-says-it-now-has-the-right-to-sell-your-photos/).

9. http://about.pinterest.com/terms/.

10. http://www.youtube.com/static?template=terms.

11. http://www.facebook.com/legal/terms.

12. http://twitter.com/tos.

13. http://instagram.com/legal/terms/.

14. Agence France Presse v Morel (United States District Court, Southern District of New York, Nathan J, 14 January 2013).

15. www.accc.gov.au/publications/online-reviews-a-guide-for-business-review-platforms.

16. See http://www.smh.com.au/lifestyle/coles-recalls-nappies-after-choking-fears-spread-on-facebook-20130927-2uj8n.html.

17. See http://www.smartcompany.com.au/marketing/34867-total-rush-slammed-on-social-media-over-use-of-topless-female-body-artists.html#

18. See, for example, ‘Shell Arctic Ready Hoax Website By Greenpeace Takes Internet by Storm’, Huffington Post, 18 July 2012 http://www.huffingtonpost.com/ 2012/07/18/shell-arctic-ready-hoax-greenpeace_n_1684222.html (where Shell reportedly decided not to sue Greenpeace, despite the adverse impact of Greenpeace’s campaign which was critical of Shell).

19. Seafolly Pty Ltd v Madden [2012] FCA 1346. An appeal to the Full Federal Court was heard on 22 May 2013. As at 9 January 2014, the Full Federal Court’s decision is pending (VID1108/2012).

20. See http://www.smh.com.au/technology/technology-news/writer-hardy-pays-up-in-legal-row-over-wrong-online-shaming-20111226-1pagk.html.

21. Adam Kaplan & Anor v Go Daddy Group Inc [2005] NSWSC 236.

22. See http://www.asa.org.uk/Rulings/Adjudications/2012/2/TripAdvisor-LLC/SHP_ADJ_166867.aspx.

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