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False or misleading claims

Section 18 of the ACL prohibits a business, in trade or commerce, from engaging in conduct that is misleading or deceptive or likely to mislead or deceive. Further, section 29 prohibits a business from making certain false or misleading representations (e.g. about the origin, quality, value and price of goods or services). These provisions apply to social media in the same way they apply to any other marketing or sales channel.

Businesses must therefore ensure that any claims made online about their products or services, or claims that can reasonably be inferred from the use of words or images, are truthful and accurate. If a reasonable conclusion from the use of particular words or images is something other than the truth, there is a risk of breaching the law. 

Example: XYZ Pty Ltd tweets that they are the first Australian company to offer a 100 per cent environmentally friendly car wash service. They had not done any research to support this and it turned out that another business had offered the same service for many years. This tweet is likely to be false, misleading or deceptive.

A business can also be held responsible for posts or public comments made by others on its social media pages which are false or likely to mislead or deceive consumers. In 2011, the Federal Court concluded that a company was responsible for fan posts on its social media pages when it knew about them and decided not to remove them: see ACCC v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74 (media release: Firm fined for testimonials by Facebook 'fans' and tweeters).

Online reviews

Consumers are increasingly using online reviews to inform purchasing decisions. These online reviews can be posted on the relevant business’s website, social media pages or dedicated review platforms (e.g. price comparison sites and product review sites).

Online reviews can take a number of forms:

  • a ratings facility: where customers allocate stars or other awards according to their experience and opinion of a good or service
  • consumers' opinions: consumers can describe their experience in using a particular good or service and make a positive or negative comment; on occasions, consumers may purchase a product to trial for review and be paid by the business for doing so
  • 'likes' registered on social media pages such as Facebook

Consumers may expect that online reviews are genuine. However, some businesses have resorted to using fake online reviews.  Fake reviews that are presented as the honestly held opinions of genuine customers are likely to breach the misleading representations provisions of the ACL.

Various parties could have an incentive to post fake online reviews including the business being reviewed, a competing businesses or third party businesses.

Case study: In 2015, The Federal Court ordered the franchisor of the Electrodry Carpet Cleaning business, A Whistle & Co (1979) Pty Ltd, to pay total penalties of $215,000 for its involvement in the publishing of fake testimonials on the internet. The Court declared that Electrodry contravened the ACL by posting a number of false reviews or testimonials on the internet and by inducing and attempting to induce its franchisees to post false testimonials or reviews about Electrodry on popular product review websites including Google, True Local, and Yelp. 

See: ACCC v A Whistle & Co (1979) Pty Limited [2015] FCA 1447