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ACCC commences action against Meta for publishing scam crypto advertisements

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Facebook owner Meta Platforms Inc and Meta Platforms Ireland Limited (together, Meta) again face regulatory scrutiny for allegedly contravening Australian laws.

In world-first litigation, the Australian Competition and Consumer Commission (ACCC) has commenced proceedings against Meta, alleging it engaged in false, misleading or deceptive conduct by publishing on Facebook scam cryptocurrency advertisements featuring the likeness of well-known Australians.

Background to case

Advertising is a prominent feature of the Facebook platform.

In this case, advertisements on Facebook promoted investment in cryptocurrency or money-making schemes. These advertisements included a link to a fake media article that attributed quotes to prominent Australians, such as Dick Smith, David Koch and Andrew Forrest, that purported to endorse the schemes. In reality, these individuals knew nothing of the schemes or the advertising, nor had they endorsed them and approved the use of their name and image in connection with the schemes.

Facebook users who signed up to the schemes were contacted by the scammers who used high pressure tactics to convince users to invest funds into the fake schemes.

ACCC action

The ACCC alleges that Facebook was in breach of the Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act (ASIC Act) by failing to prevent the publication of the crypto advertisements and by taking insufficient steps to remove them, even though:

  • Facebook was aware of the advertisements, and
  • public figures had complained that their names and images had been used in similar advertisements.

The allegations are in the context of Facebook assuring its users that it detects and prevents spam and promotes safety on Facebook.

The ACCC alleges the advertisements were likely to mislead users into believing the advertised schemes were associated with the well-known Australians featured in the advertisements. Consequently, the ACCC alleges that Meta engaged in false, misleading or deceptive conduct by publishing the scam advertisements in breach of the ACL or the ASIC Act.

For more information, see the ACCC press release on its website.

Takeaway

The ACCC prosecution of Meta is a useful case study regarding the active steps digital platforms must take to monitor and remove fake advertisements and scams.

It remains to be seen how the parties and the Federal Court will address the High Court's decision in Google Inc v Australian Competition and Consumer Commission 249 CLR 435. In this case, the High Court held that Google was not liable for misleading or deceptive conduct by publishing or displaying sponsored links that contained misleading representations made by advertisers.

Instead, the Court held that Google was merely acting as a conduit in passing on the misleading or deceptive representations and had not endorsed or adopted them.

Should the ACCC be successful against Meta, this case may have wide-reaching consequences for digital platforms that use targeted advertising and provide a platform for scammers to target users with fake advertisements.

For advice and support regarding competition and consumer law requirements and best practice within your organisation, contact our experienced team of competition and consumer law experts.

Photo by Firmbee.com on Unsplash.

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

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Keely O'Dowd

Senior Associate