Deceptive ads, including "celeb-bait cryptocurrency scams", alleged on the part of Facebook
The Federal Court of Australia has required two applicants to make changes in their statement of claim in a consumer law case that they brought against Meta Platforms Inc. and Meta Platforms Ireland Limited (collectively, Meta).
In their claim, the Australian Competition and Consumer Commission (ACCC) and a delegate of the Australian Securities and Investments Commission (ASIC) alleged that Meta contravened provisions of the Australian Consumer Law (ACL) and the Australian Securities and Investments Commission Act 2001 (ASIC Act) by publishing misleading or deceptive advertisements, including “[c]eleb-bait cryptocurrency scams”, on Facebook.
The applicants asked the court for declaratory relief, orders for pecuniary penalties, injunctions, and ancillary relief. According to the applicants, their evidence in this case would establish the perpetration of a “well-known scam” and Meta’s longstanding awareness of that scam.
The applicants stressed that this was different from a “traditional advertising case”. Their case called attention to what they dubbed “a fundamental systemic problem in the Facebook Platform”.
Background of the case
Meta engaged in misleading or deceptive conduct by displaying on Facebook ads falsely implying endorsements from well-known public figures, the applicants argued. The “Fake Celebrity Endorsement Ads” allegedly linked to landing pages promoting cryptocurrency schemes.
Meta violated ss. 18, 29, and 34 of the ACL and corresponding provisions of the ASIC Act by letting these ads be shown to Australian users, the applicants claimed.
The applicants accused Meta of failing to implement adequate safeguards to prevent these ads from appearing on the platform despite knowing about the issue since September 2017. Meta failed to warn users about the potential risks associated with these ads and continued to profit from their display, the applicants said.
Court ruling
In Australian Competition and Consumer Commission v Meta Platforms, Inc. (formerly Facebook, Inc.) (No 3) [2024] FCA 890, the Federal Court did not find the pleadings deficient but ordered the applicants to amend aspects of their statement of claim.
The court directed:
- the applicants’ commitment to the ads specifically covered by their allegations so that Meta could understand the case against it
- a substantial revision of the pleading in the accessorial liability case so the applicants could properly formulate the relevant causes of the action
- a repleading of paragraphs of the claim to clear up the definition of and distinction between “ongoing” and “continuing”
- changes in certain parts of the claim relating to pleaded representations and reasonable safeguards
The court reserved the question of costs until it could further hear from the parties on the repleading of the accessorial liability case.