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The legal risks of online customer feedback

More Australian businesses are allowing customers to post comments and feedback either on the business’ website or on their social media sites.  With the benefits of customer interaction comes the risk of legal liability for customer comments on a business website. 

When can a customer’s posts to a company controlled website expose the business and, potentially, its directors, to legal responsibility?

In the employment context, recent cases suggest that an employer may be liable for discriminatory, defamatory or bullying comments posted on a company controlled website. Similar considerations apply to those businesses which invite customer comments on their websites or social media pages.

For example, a company director was held personally liable when false testimonials about his company’s products were posted by clients on the company’s website, Facebook and Twitter accounts.  The Court considered that the company (and the sole director, as an accessory) were engaging in misleading and deceptive conduct because:

(a) they knew of the false testimonials; and

(b) they decided not to remove them

The Court found that this conduct contravened the Competition and Consumer Act because, in deciding not to remove the clients’ false testimonials, the company and its director became legally responsible for them.  The Court imposed penalties of $15,000.

In another case, a man successfully sued a search engine provider for defaming him.  When users entered his name in the search engine, news articles and images appeared linking him to a criminal figure.  The Court found that although the search engine provider did not author the defamatory material, it became responsible when it failed to remove it after the man complained.  He was awarded $200,000 in damages.

It is likely, given the approach taken by the Court in these cases, that a business will be responsible for misleading or defamatory statements on a website, or social media page which it controls, if, despite complaint, they allow those statements to remain on display.   Businesses will have to be proactive in managing material posted by others on their website and respond swiftly to complaints.

Many businesses have website terms and conditions to limit the liability of the business for the actions and comments of users of the website. However, those terms and conditions may not be effective to eliminate the risk of liability for damage to reputation or misleading comments.

Businesses can minimise their risk of legal liability for postings by:

1.    ensuring that use of the website for comments is governed by terms and conditions which amongst other things:

(a)  limit liability for statements not authorised by the business;

(b)  indemnify the organisation for liability against actionable comments by customers using its website;

2.    developing a monitoring and complaint handling process, proactively managing feedback and removing potentially actionable comment; and

3.    having an internal social media policy that clearly articulates non-acceptable conduct of staff along with who is authorised to represent the organisation in social media forums.

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