22 06 2018 Insights Litigation & Dispute Resolution

Fake Social Media Endorsements: Can Social Media Platforms be liable?


By Darryl Broderick and Niamh Meagher
4 July, 2018

Online media platforms such as Facebook and Google strongly deny that they are publishers of online material, most likely to avoid assuming liability for online defamation by users of their services. While they have managed to avoid being held liable for user generated content in many cases, on account of the discrete defences available to social media platforms and other online data hosts, such defences may not be available when it comes to issues relating to paid for advertising.

English Entrepreneur Claims False Endorsements Caused Reputational Damage
The founder and chair of Money Saving Expert, Martin Lewis, has brought a claim for defamation against Facebook in the English High Court.

Mr Lewis’ claim is based on allegedly fake adverts, posted on Facebook, which include his image and name alongside false promises and endorsements, according to his online blog. These adverts have allegedly caused financial loss to individuals who invested in products they believed to be endorsed by Lewis.

The adverts complained of used paid for advertising space, rather than being simply third party publications. Facebook could be liable for defamation if it can be shown that they had knowledge of the defamatory nature of the advertisements. The issue of fake endorsements which may cause reputational damage could become increasingly common, and the approach of the English High Court should be followed with interest in this jurisdiction.

Fake Endorsement Concerns in Ireland
Dragons’ Den mentor Gavin Duffy has also expressed concern about the use of his image in fraudulent advertisements for a crypto currency, according to a recent report in the Irish Times.

Mr Duffy claimed on RTE News at One that his image was used in an advertisement for a scheme called Bitcoin Trader. A paid for advert on the BBC news website and on the Guardian’s website contained a report about Bitcoin Trader being featured on a fake episode of the Australian version of Dragon’s Den, but used pictures and fabricated testimonials from Mr Duffy. Although Mr Duffy contacted both the BBC and the Guardian and the adverts were taken down, it was reported that this took considerable time.

Current Legal Situation in Ireland
In the High Court case of Muwema v Facebook [2016], the Judge held that, under European and domestic legislation, the data host was unlikely to be liable, whether by being required to remove online material or in damages.

Special protection is given to data hosts under Directive 2000/31/EC (“The Directive”) which was transposed into Irish law by the European Communities (Directive 2000/31/EC) Regulations 2003.

Regulation 18 affords protection to data hosts on condition that the host:

“(a)...does not have actual knowledge of the unlawful activity concerned and, as regards claims for damages, is not aware of facts or circumstances from which that unlawful activity is apparent, or (b)...upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information”.

This protection is bolstered by the defence of “innocent publication” provided for by s.27 of the Defamation Act 2009 (“the 2009 Act”). Section 27(1) states that it will be a defence to an action if the defendant can prove that:

a) he or she was not the author, editor or publisher of the statement to which the action relates;

b) he or she took reasonable care in relation to its publication; and,

c) he or she did not know, and had no reason to believe, that what he or she did caused or contributed to the publication of a statement that would give rise to a cause of action in defamation.

Section 27(2) lists three types of person that will not be considered such a publisher under s.27 (1)(a), one of these being a person who:

“in relation to any electronic medium on which the statement is recorded or stored, he or she […] was responsible for the operation or provision only of any equipment, system or service by means of which the statement would be capable of being retrieved, copied, distributed or made available”.

It is unclear whether Facebook and Google, who collect and track the data of their users in order to sell the information to advertisers, can be described as only operating or providing a host system for data under this subsection.

Legal Protection for those Defamed on Social Media
Despite the significant level of special protection given to data hosts, those who have been defamed on online platforms are not without legal options to protect their reputations.

Under both Regulation 18 and s.27 of the 2009 Act, the availability to the host of the protection from damages depends on its knowledge of wrongdoing. Regulation 18 requires actual knowledge on the part of the data host that an online defamatory publication is unlawful in order to impose liability on the host. Material which is defamatory on its face may be lawful on a number of grounds including truth or because it was published on an occasion of qualified privilege.

Therefore, it is arguable that not only must the complainant bring to the data host’s attention that material is prima facie defamatory, but they must also provide sufficient evidence that it is unlawful, i.e., that it cannot be defended successfully. A detailed complaint to the host outlining the circumstances of the unlawful activity including if possible why no defence could be successful, would be advisable to prove the host has actual knowledge.

The High Court has cast doubt on the remedies of both injunctions and damages for online defamation in Muwema v Facebook Ireland, where allegations of corruption were made against a Ugandan lawyer by an anonymous user. Facebook Ireland refused to remove them on the basis that it could not determine whether they were true or false. The plaintiff sued for damages and injunction orders. The Judge refused to grant an injunction order and held that it was hard to envisage any instance where a plaintiff could obtain relief under s.33 of the 2009 Act against a data host. The Judge accepted Facebook’s submission that it was “reasonably likely to succeed” in its defence that it was an innocent publisher.

On the issue of adequacy of damages, the Judge also accepted the submission of Facebook that, despite notification from the plaintiff, it could not adjudicate on the validity of the complaint made to it. He therefore believed that Facebook fell within the Regulation 18 protection from damages as it lacked the requisite actual knowledge. However, the Judge was only deciding the injunction application so his view on protection from damages does not appear to create any precedent that must be followed in the future.

Future Claims involving False Endorsements
Although data hosts are protected from defamation actions in a way that traditional publishers such as newspapers are not, neither the Directive nor the 2009 Act provide total immunity from liability.

To avail of the Regulation 18 defence, a host must remove complained of material once it has actual knowledge, or else it will become liable in damages as any other publisher would.

Hosts cannot rely on the defence of innocent publication under s.27 of the 2009 Act to escape liability in circumstances where they have received notification and where they do more than provide a service by which data may be retrieved, copied, distributed or made available.

Neither defence may be available for social media platforms in “fake endorsement” cases involving paid for advertising if the process whereby such advertising is placed involves the social media platform reviewing the contents of such advertisements prior to publication. It will be interesting to observe whether the English High Court finds that a publication in the context of paid for advertising space on social media will infer the requisite knowledge of unlawful material.

For more information on the content of this Insight please contact:
Darryl Broderick, Partner and Head RDJ's Litigation and Dispute Resolution department, darryl.broderick@rdj.ie, +353 21 4802767

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