Legal risks of Social Media for business

There is no doubt that social media are very powerful tools for business to build up their reputation. However, it is also a very easy tool to be abused by companies if they are consumed by greed. Commonly, companies have to face the issues of copyright infringement, defamation, confidential information and reputation risks due to wrongly use of social media.

In 2009, the Australian Competition and Consumer Commission (ACCC) brought forward proceedings in the Federal Court against Allergy Pathway (AP) Private Ltd and its sole director Paul Keir, on the account of false allegations about AP allergen diagnostic products. AP had to provide undertakings that it would not make more false representations of their products.

However, the ACCC once again brought charges onto the Federal Court against AP in 2010, finding them in breach of previous undertakings and engaged in contempt of Court by publishing the following statements:

(A) Statements and links to statements on their own website and Social Media Pages;

(B) Testimonials posted on the AP website and Twitter pages written by clients;

(C) Client Testimonials on AP’s “Facebook Wall” and;

(D) AP’s answers to queries posted on its “Facebook Wall”.

AP objected to being responsible for statements written by their clients that were posted on its Social Media Pages. However, The ACCC believed that although the statement has been made ​​by a third party, AP is responsible to monitor if those published statements were in violation of its previous undertakings as well.

The Judge of the case ruled AP responsible for breaching previous undertakings in contempt of the Court for a penalty of $7500 within 90 days and to publish corrective advertising.

This case really shows that enterprises have to be really careful what they put up, or even what others put up on their websites so that it isn’t misleading to other consumers. The enterprise itself has the responsibility of its own website, and its up to them to monitor comments left on their web page.

So, please do not leave misleading comments on my blog! =D

Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd


8 comments on “Legal risks of Social Media for business

  1. Hope my comments was not misleading.

  2. Hi leo, I agree with you that the enterprises need to be careful about the uses of social medias. Social medias policy will help to reduce some of these risks. Their employees need to know what they can do and what they must not do in social medias. It also act as a guideline for third parties about regulation of their sites which will not be tolerated misleading posts. It is scary to see that a post in Facebook by someone else you don’t even know can lead you to a legal issues.


    Prapat W.

    • Yes, I agree with you a lot. But sometimes it is the enterprise’s own fault for using misleading comments to promote it’s own product. The government or associations like the ACCC should also help monitor companies so they do not abuse social media.

  3. Great blog, I found it quite interesting and informative especially the part whereby companies are still resonsible for not monitoring statements made by third parties. Do you think they can help stop this issue if they require users to not be anonymous or do you think that would scare users away from not using social media tools in relation to them?

    • More or less, I think it would definitely help the companies if bloggers are using their name, as they could find out more easily if people are leaving malicious comments. But bloggers might use a fake account to comment, so in the end the companies might need to monitor its blog more. I am sure it might affect some anonymous users to leave a comment or some might be lazy setting up a account. Moreover, sometimes it might be the companies who are using the comments for other purposes, such as misleading other consumers in my example. In the end, I think it is the companies’ responsibility to keep their blogs “healthy”.


  4. Hi Leo, Companies have to monitor and control what customers post on their website to ensure that the information is not misleading to other consumers. In your blog a company was fined $7500 for breach of contract by a third party. The company had no strategies in place to monitor and evaluate the kind of information users were posting on their website. These repercussions made other companies follow suit in setting up command centres to filter bad and misleading content from their company website. I liked your blog…



    • Hi Mazen,

      Thanks for the compliment. I agree with you 100% that companies need to monitor their own blogs for misleading and malicious content, but I think consumers also have their own responsibility to make sure that their own comments are not being used in a misleading way. Hope that you’ll keep following my blog!


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