Insights

In brief - Social media brings both new risks and new opportunities

Social media provides businesses with a new avenue to communicate with their customers. However, social media also creates significant legal and reputational risks for businesses which embrace it and even those which do not.

Immediacy and reach of social media amplifies risks

Any communication between a business and the public can give rise to complex issues that span various areas of law including privacy, intellectual property, employment, discrimination and defamation. In that sense social media is not unique; what is unique about social media is that those risks can be magnified and can manifest in a short period of time.

The unique features of social media, compared to more traditional forms of communication, are that it:

• exists in a rapidly changing technological environment, which results in changing behaviours and standards of acceptable behaviour

• allows for the rapid and widespread propagation of content

• allows for content to be communicated with varying degrees of anonymity

• creates difficulties in identifying where the content was created

This article sets out three recent examples of problems related to social media that companies can face. This is by no means an exhaustive list.

Company held to be responsible for testimonials on Facebook page and on Twitter

In ACCC v Allergy Pathway Pty Ltd, the Federal Court held that a company was in contempt of court in relation to content posted by users on its Facebook page and on Twitter as if that content was posted by the company itself.

The Federal Court had previously made orders against the company, restraining it from making certain representations. Some time after those orders were made, users posted comments on the company's Facebook page and on Twitter. The comments included representations that would have been in breach of the orders had they been made by the company.

The evidence was that the company was aware of the content and did nothing to remove it. The court formed the view that the company did not remove the content as it wanted to benefit from those comments.

The court determined that the company became responsible for publishing the comments at the time it became aware of the comments and elected not to take any steps to remove them.

VB held to be liable for offensive comments on its Facebook page

The Advertising Standards Bureau (ASB) has recently upheld a complaint relating to material posted on the VB Facebook page.

The Facebook page featured a number of questions posed by the company to which users were able to post comments and replies. The inevitable occurred: a series of racist, sexist, offensive and simply baffling comments were posted on the Facebook page by users.

A complaint was lodged with the ASB requesting that it review the content on the Facebook page. The complaint pointed to the Allergy Pathways decision as authority for the proposition that companies can be liable for content posted on social media by users.

The ASB accepted that content posted by users can constitute advertising for which a company could be liable. In reaching that determination, the ASB considered that the company had failed to monitor and remove the offensive content in a timely fashion. Some of the content had been posted as early as 2011.

It is worth noting that the ASB has a limited ability to enforce its determinations. However, the determination is another example of a company being responsible for content posted by third parties and highlights the reputational risks associated with social media.

Dismissal of an employee due to comments on Facebook

In Linfox Australia Pty Ltd v Stutsel, the full bench of Fair Work Australia recently upheld the decision of a Fair Work Commission to reinstate an employee who posted offensive comments on Facebook.

The employee was dismissed after posting racist and sexist comments about two of his managers on Facebook. Fair Work Australia found that the comments were "distasteful", "outrageous" and "disgusting".

However, Fair Work Australia held that the employee should not be dismissed, as the comments were so exaggerated and stupid as not to amount to a serious threat.

The door is not closed on the possibility that an employee may be dismissed for comments posted online. Whether or not an employee could be terminated for this behaviour would depend on factors such as how widely the comments are disseminated and the seriousness of the comments. (For more information on this subject, please see our earlier article Public displays of dissatisfaction on social media - lessons for employers.)

Businesses should take social media risks seriously

The examples set out above demonstrate the often conflicting set of problems that a business may face due to social media. Whilst the potential benefits of social media are undeniable, consideration should also be given to the risks.

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​