Are Social Media Companies Accountable For the Advertisements They Host?

On 8th February 2022, Channel 4 News covered the story of Australian Billionaire Andrew Forrest, who is taking Facebook to court in his home country, alleging breaches of anti-money laundering laws. Mr Forrest alleges that Facebook behaved criminally by refusing to remove cryptocurrency scam adverts uploaded by criminals using his name and likeness without permission. Criminals used Mr Forrest’s name and likeness as a successful businessman to dupe victims into believing that their fraudulent schemes were genuine. Mr Forrest told Channel 4 News that he has been asking them to remove the content since 2019 to no avail. The case will now be heard by a magistrates court in Western Australia in late March 2022, and if successful, it may force Facebook and other social media technology platforms to change how they publish advertisement content. This raises the question; what are the legal obligations of social media companies when it comes to hosting and disseminating advertisements uploaded to their platforms?

Can civil action be taken against a social media company in the UK?

Under the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013) (E-Commerce Regulations), information society services (ISS) have limited liability if they are acting as a conduit, cache, or host of information. ISSs are services provided for remuneration, at a distance, by electronic means and at the individual request of a recipient, and can include internet or online services such as social media platforms. Regulation 19 of the E-Commerce Regulations states that ISSs are not liable if:

  • They have no actual knowledge of any illegal activity or information and, as regards claims for damages, are not aware of facts or circumstances from which the illegal activity or information was apparent.
  • On obtaining such knowledge, they act “expeditiously” to remove or disable access to the information.

This does not mean that social media platforms will always avoid legal proceedings in such circumstances. In many cases whereby objectionable content has been uploaded and disseminated by a social media platform, an online takedown notice or complaint to the ISS will yield a successful removal. Where a user, if their details are known, continues to repeat the same behaviour, it may be possible to gain an injunction to prevent any future occurrence and to gain compensation if appropriate. The basis of such claims may be intellectual property infringement, defamation or harassment.

If the technology platform does not remove the offending content (as happened in the case of Mr Forrest), action may be taken against them in the form of a civil order requiring the removal of the content. As such, while the E-Commerce Regulations offer some protection to platform hosts such as Facebook, where they are found to have knowledge of wrong-doing, this may constitute a civil offence.

Is the current legal regime in the UK robust enough to deal with online scam advertisements?

Back in October 2020, the Competition and Markets Authority (CMA), in a report entitled, ‘A new pro-competition regime for digital markets’, recommended legal changes to address “unlawful or illegal content, such as fake online reviews and scam advertisements, hosted on platforms which could result in economic detriment to consumers and businesses”. As such, there is a known gap in the law when it comes to online scam advertisements such as those for high-risk financial schemes. The CMA has recommended a new regulatory regime for digital markets to deal with such problems. This would mean that platforms such as TikTok and Facebook would be compelled to actively find and remove any unlawful or illegal content and prevent any recurrence of its publication on its platform. The suggestion is this may be possible by implementing a new duty of care or by making changes to consumer protection regulations.

Importance of independent research before investing in cryptocurrencies

Given the lack of protection available to consumers and the limited liability of technology platforms under the current regulatory regime, it is more important than ever for those thinking of buying cryptocurrencies from an advertisement they have seen online to undertake thorough due diligence before parting with their money. Social media platforms have made it easier than ever for anyone to create a scam advertisement, including for cryptocurrencies, to be uploaded to a social media platform. Even where social media platforms are taking appropriate action to take down content, they have actively found, or as a result of a takedown request, there still remains the possibility that in the time between the upload and takedown, many people may have been duped, losing vast sums as a result.

Final words

The cross-jurisdictional element of scam cryptocurrency scheme adverts hosted on social media platforms make matters even more complex. Content may be uploaded in one country, hosted on a server in another country, for a social media platform in another jurisdiction, and the ultimate victim may be in another country altogether. What is needed is a more joined-up approach by the overarching regulatory authorities to ensure that victims are not left exposed in the event that they are taken in by a crypto scam scheme they encounter online.

If you are facing prosecution relating to online fraud, our Criminal Law Barristers and Solicitors can help. You can contact us through our contact page here.