With more than 1.23 billion Facebook users, nearly 974 million people using Twitter and 700 million registered Instagram accounts, for most businesses the question these days is not whether to use social media for business purposes, but how.   The asking of the latter question should get businesses thinking about the legal implications of social media use, but unfortunately we still see issues arising. 

An internet provider, which was a new-entrant to the market at the time, advertised on social media that they were the “fairest” internet provider in New Zealand. 

Even if this was true there would be a difficulty in proving it if challenged, which put them at risk of being unable to substantiate an allegation of breaching the Fair Trading Act (FTA) in relation to “unsubstantiated representations.” 

Moreover, the phrase implied that all other internet provider companies were unfair, or at least, “less fair”. Again, this could be challenged under the FTA as being an unsubstantiated representation. It could also be “misleading” under the same legislation.

This example shows that if you think that social media is a more relaxed forum for your advertising then you are mistaken.

Businesses do not have the luxury of using social media in the same way as personal accounts are often used.  This is because they are subject to the same layer of consumer law and advertising standards which govern paid-advertising.

In the case of professionals, there may also be professional and ethical obligations owed to a governing body that must still be fulfilled even when posting on Facebook or other social media platforms.

Therefore, each time you post, tweet, or otherwise engage with users, you should have the FTA, Consumer Guarantees Act, Advertising Standards, the Terms of Use of each platform and your professional obligations top of mind.

What happens if I breach advertising/consumer regulations on Social media?

In some instances very little happens. Most breaches are rectified by an order to remove or amend the offending advertisement.  However, decisions of the Advertising Standards Authority (ASA) are also provided to the media.  Depending on the nature of the “offending” this could have serious consequences for the reputation of a business.

Of course, in some instances, the impact of the “offending” advertisement, in terms of consumer response, is positive.  Consumers can sometimes feel refreshed by advertisements that push the proverbial envelope. Further, the media attention surrounding a decision that the advertisement must be amended or removed can also be positive for a company, where consumers jump on board in support of the perceived “under-dog.”

Why be concerned?

The result of being caught in breach of advertising standards may or may not have an effect on your business’ reputation, but it will at the very least penalise you in time.  You will need to respond to allegations and engage in the dispute resolution process.  The inconvenience alone, for a busy business owner, is often penalty enough for that owner in the event of a, often unintended, breach.

As a result, we remind our business clients of their obligations when advertising, even on social media, so that they are informed of potential risk and can make a calculated decision whether to proceed with a proposed advertising campaign.

In the context of one-off posts and tweets we encourage business owners to put their Director hat on when using social media and not slip into “personal-mode” when engaging with consumers.  The latter is where many business owners get caught out.




Claire Tyler