The Australian Competition and Consumer Commission (ACCC) has commenced proceedings against Meta Platforms, Inc. (Meta) (formerly Facebook) in the Federal Court, alleging Meta allowed the publication of misleading and deceptive "Fake Celebrity Endorsement Ads" on its Facebook platform. These ads allegedly featured celebrities and public figures to create the false impression of endorsements for various financial schemes. The ACCC is seeking declarations, financial penalties, and injunctions.

Meta has challenged the ACCC’s approach, contending that the allegations lack sufficient detail to support a proper defence. Recently, Justice Yates of the Federal Court ordered the ACCC to revise its statement of claim, requiring a greater level of specificity about the advertisements in question if the matter is to continue.

ACCC’s allegations

The ACCC claims Meta is responsible for publishing ads which misled consumers by falsely associating leading Australian figures with investment opportunities, many of which proved to be scams. Further, it argues Meta is aware of these ads and has consistently and repeatedly failed to implement adequate mechanisms to prevent their ongoing publication. As such, the ACCC argues Meta is not just a passive intermediary in the publication of these advertisements and is liable, as an accessory, for the misleading conduct of advertisers placing deceptive ads on its platform.

Meta’s defence

In defending the proceedings, Meta contends it cannot be liable for content about which it had no actual knowledge and, as a platform, it ought to be able to rely on existing publishers’ defences available under Australian law. In its early response to the claim, Meta went on the attack, arguing the pleadings are inadequate for several reasons and the claim should, therefore, be struck out. Meta argues that:

• The ACCC’s definition of ‘Fake Celebrity Endorsement Ads’ is overly broad and vague. The company insists the ACCC should identify which specific advertisements are allegedly in breach so Meta can respond meaningfully to the claim.
• The ACCC is impermissibly aggregating the conduct of multiple, unrelated advertisers to show knowledge and conduct, when it is required to identify precisely how Meta allegedly aided or abetted each contravener’s actions.

Court's initial findings 

Justice Yates found that while the concept of "Fake Celebrity Endorsement Ads" is objectively recognisable, the ACCC must set out its claim by providing a representative sample of advertisements and sufficient detail to allow Meta to respond to the allegations – especially as the case is one based on accessorial liability. The Court directed the ACCC to clarify the basis of Meta’s alleged liability for each individual contravention – which may be difficult and time-consuming for the ACCC to do. The case continues in the Federal Court.

What does this mean for your business?

There are a number of activities businesses should be across to ensure best practice when engaging in digital advertising.

1. Platform liability is evolving: Digital platforms, marketplaces, and intermediaries should be alert to their potential for exposure. The spotlight on Meta signals greater regulatory expectations, and hosts of third-party content should prioritise implementing robust controls against misleading conduct.
2. Risks to advertisers and platforms: Advertisers and influencers already face liability for misleading or deceptive conduct online. However, if successful, regulators are more likely to examine and consider the nature and degree of knowledge or control that platforms exercise over third-party material.
3. Review your practices and procedures: Be proactive in reviewing the adequacy of processes to screen, monitor, and remove misleading ads and product claims – especially (but not only) those purporting to show endorsements by public figures.