The ACCC has commenced proceedings in the Federal Court against Meta Platforms, Inc. and Meta Platforms Ireland Limited, alleging that these entities are liable for scam advertisements published by third parties on Facebook.
The ACCC alleges that Meta Platforms, Inc. and Meta Platforms Ireland Limited:
- engaged in false, misleading or deceptive conduct by publishing scam advertisements on Facebook
- aided and abetted or were knowingly concerned in the scammers’ misleading and deceptive conduct and false representations,
in contravention of the Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
The advertisements contained links that directed Facebook users to fake media articles featuring public figures, such as Dick Smith and Andrew Forrest, which gave the false impression that these individuals had endorsed particular cryptocurrency or money-making schemes.
The ACCC alleges that Meta was aware that the scam advertisements were being displayed on Facebook but did not take sufficient steps to address the issue. Further, the ACCC alleges that Meta assured users that it would detect and prevent scams and promote safety on Facebook but failed to adequately do so.
The ACCC is seeking penalties, costs and other orders against Meta.
The regulatory environment
The ACCC is taking action under both the ACL and the ASIC Act in the alternative. This is because the Court may consider that the cryptocurrency advertisements involve financial services, which are outside the scope of the ACL and instead covered by the ASIC Act.
ASIC would usually commence proceedings under the ASIC Act. However, in this case, it has delegated its powers to the ACCC.
The outcome of this case will determine whether social media companies will be held liable under Australian law for advertisements published on their platforms, and is likely to have a lasting effect on the practices engaged in by these companies in monitoring such advertisements.
Please contact a member of our corporate advisory team if you have any questions about this alert.