The Australian Competition and Consumer Commission (ACCC) has launched legal action against Facebook, alleging the social media giant misled consumers with their use of data.
The regulator is seeking declarations, injunctions, financial penalties, and costs from Facebook, and is claiming Facebook was in breach of Australian Consumer Law.
This article examines the legal action against Facebook and its implications for consumers.
Background of the Case
The Australian Competition and Consumer Commission (ACCC) is taking legal action against Facebook in the Federal Court of Australia over allegations that Facebook has contravened the Competition and Consumer Act 2010 (Cth) by making false or misleading representations to its customers about their rights to privacy, control and access of their data.
The ACCC alleges that Facebook misled consumers into thinking they had no choice but to sacrifice their privacy rights to use the services. It claims this false impression contrasts with laws allowing users to withdraw consent for data sharing, delete their accounts or opt-out of analytics services.
Facebook also allegedly told consumers they could prevent information from being shared with third parties by adjusting settings on their account, when information was being shared with service providers regardless of what settings were selected. As well as providing false or misleading representations, the ACCC alleges that Facebook made it difficult for consumers to access and exercise their full rights over their data.
The ACCC’s proceedings were filed on 14 May 2021. They will seek declarations, injunctions, pecuniary penalties orders and costs from Facebook for engaging in conduct that violated section 18 and 29(h) of the Competition and Consumer Act 2010 (Cth). Injunctions aim at restraining unlawful conduct; a breach of section 18 carries civil penalties up to $2 million, while a breach of section 29(h) carries penalties up to $1.1 million per breach.
Australian regulator sues Facebook over alleged misleading use of consumer data
The Australian Competition and Consumer Commission (ACCC) has launched legal action against Facebook, claiming the tech giant has breached Australian consumer laws by misleading users about how their data was used.
The lawsuit alleges that Facebook made false, misleading or deceptive claims by telling people their data would only be used for security or safety purposes when using their information commercially. The ACCC is concerned that this may have impacted how individuals decided to give up their data.
In particular, the ACCC has alleged that Facebook collected sensitive personal information from its users, such as political views and lifestyle choices, without seeking sufficient and informed consent. According to the ACCC’s chair Rod Sims, this practice is immoral and represented a serious breach of consumer law.
The ACCC is asking for declarations, injunctions, pecuniary penalties, corrective notices and costs from Facebook about these allegations. It has also asked that Facebook be required to refund any fees paid by consumers who were misled regarding the use of their data.
ACCC’s Claims
The Australian Competition and Consumer Commission (ACCC) has initiated legal action against Facebook Inc. in the Federal Court of Australia, claiming the company misled consumers in handling their data. The ACCC is seeking declarations, injunctions, pecuniary penalties and costs.
This article will explore the ACCC’s claims against Facebook.
Misleading Representations
The Australian Competition and Consumer Commission (ACCC) has brought proceedings against Facebook, alleging that it made misleading or deceptive representations in using consumer data from its users. In particular, the regulator alleges that the social media giant misled consumers about the extent to which personal data was secure, unobservable and unfettered from access by a third party.
Furthermore, ACCC contends that Facebook has failed to adequately inform consumers about how their personal information is collected, disclosed and possibly used for targeted advertising. Finally, the ACCC also claims that Facebook negligently allowed access to user information without their knowledge or consent.
As part of its statement of claim, ACCC’s seeks declarations, injunctions against infringements of the law; financial penalties; corrective advertising; an order restraining conduct including using data contrary to assurances given; payment of compensation to those affected; payment of costs arising out of false or misleading representations; and compliance orders requiring training for personnel on compliance requirements concerning consumer law.
Unconscionable Conduct
The ACCC alleges that Facebook has engaged in unconscionable conduct, potentially in breach of Australian Consumer Law. This would be in relation to Facebook allegedly making false or misleading representations to consumers regarding what it was doing with users’ personal data, specifically where consent was required for certain products and services.
The ACCC alleges that Facebook misled its users about their ability to opt out of targeted advertising, how it collected their personal information, and the security measures it employed. It also reportedly falsely represented that some people were exempt from targeted advertising by ‘opting out’, a right that allegedly did not exist or was ineffective.
The proceedings relate to a major update by Facebook to its terms and conditions in December 2014 regarding how it used consumer data. This update reportedly gave Facebook substantial powers over consumer information, including combining different categories of personal user information such as location, phone contacts and other device identifiers across different websites owned by it within the same app or service without clear prior notice or consent from users.
Facebook’s Response
Facebook has responded to the allegations brought forth by the Australian Competition and Consumer Commission, stating that it will vigorously defend itself against the allegations and is committed to protecting the data privacy of its users.
Facebook stands by its prior statements that how it has handled data has complied with Australian privacy law. The company also states that it has implemented several measures to ensure user data is safe and secure.
Facebook’s Denial
On August 15, 2018, the Australian Competition and Consumer Commission (ACCC) initiated legal proceedings in the Federal Court of Australia against Facebook Inc. alleging that it had contravened Australian consumer law through its use of user data.
In response to the ACCC’s statement and lawsuit, Facebook issued a statement denying any wrong-doing and characterized the allegation as “misleading”. In a press release by Deputy General Counsel (Australia & New Zealand), Stephen Deadman, Facebook maintained that they provided clear information to their users regarding how their data is used, supplemented this information with additional “in-product notices” and responded to any regulatory questions or concerns that have arisen in good faith.
Facebook has also publicly noted they are committed to participating in the open dialogue between industry leaders, regulators and privacy advocates around data protection efforts including an active presence at industry events such as PrivacyWeek. Although the specifics of this situation are still being evaluated by Australia’s Regulator pendent litigation, Facebook intends to vigorously defend against misconduct or misrepresentation claims throughout this process.
Facebook’s Defense
Facebook has defended itself against the Australian Competition and Consumer Commission’s (ACCC) lawsuit, denying that it has engaged in misleading or deceptive conduct concerning consumers’ handling of personal data. Facebook’s response argued that the ACCC’s suit is “legally incorrect and misconceived.”
The firm said it had only allowed users to control how their data was used and disclosed within Australia’s Privacy Act. It also said that it permits a range of uses under its terms of services and makes this clear to users. It argued that as soon as a user interacts with another user who is not subject to the same legislation, then their data can be shared with them, but only after being informed of this outside the privacy policy, after being informed of the types of third party apps their data will be shared with, and again if those apps change.
Moreover, Facebook argues that all users authorize their use and disclosure of personal information by agreeing to its Data Use Policy when signing up for an account or using any third-party applications or websites connected to Facebook products. The company claims “such authorization meets or exceeds any requirements imposed by Applicable Laws.” Thus, it believes there is no breach of duty nor misleading representation under Australian law regarding how the firm’s products handle users’ personal information.
Potential Outcomes
The Australian Competition and Consumer Commission (ACCC) has announced that it has commenced proceedings in the Federal Court against Facebook alleging that it has engaged in misleading conduct and made false or misleading representations to consumers about personal data.
The ACCC seeks declarations, injunctions, financial penalties, and costs from Facebook. These potential outcomes could impact how Facebook handles consumer data and operates in Australia.
Declarations
Declarations are a resolution in which the court orders one or more parties to make a statement expressing an opinion on the matters acknowledged before that court. About the Australian Competition and Consumer Commission (ACCC) lawsuit against Facebook, declarations may include:
-A statement recognizing that Facebook’s actions violated or breached its responsibility under the Competition and Consumer Act 2010 (Cth);
-A declaration ordering Facebook to inform its users of any activities involving their data without their consent;
-A declaration ordering Facebook not to engage in future conduct similar to what led to this legal proceeding;
-Any other declarations ensuring compliance with the Competition and Consumer Act 2010 (Cth).
These declarations may be framed as an order from the court requiring an accused party, such as Facebook, to take action or refrain from certain actions to uphold their obligations under the law. However, courts may also impose additional remedies upon a defendant if appropriate, ranging from warnings about their conduct to injunctions preventing them from engaging in certain activities.
Injunctions
Injunctions are judicial orders that require a party to do or refrain from doing a specific act. For example, the Australian Competition and Consumer Commission (ACCC) is seeking injunctions from Facebook to restrain it from engaging in or continuing any conduct declared by the court to be in breach of the Australian Consumer Law.
This includes prohibiting Facebook from making false, misleading, or deceptive representations about how personal data provided by users will be used and collected. If granted, this injunction would help protect consumers from suffering harm due to Facebook’s failure to comply with the law.
The ACCC also seeks an order requiring Facebook to publish corrective notices and establish an email account for ACCC review regarding associated matters.
Pecuniary Penalties
In the case of Facebook, the Australian Competition and Consumer Commission (ACCC) is seeking a declaration that certain conduct of the company was misleading or deceptive, that injunctions were to be imposed, and financial penalties were to be paid.
Pecuniary penalties are financial payments made by companies in breach of consumer legislation. The ACCC has sought pecuniary penalties as they can act as a strong deterrent against future anti-competitive behaviour and breaches of consumer law by providing an economic incentive for businesses to comply with consumer laws.
This means that if it can be proved that Facebook has breached consumer protection regulation, then the court may require it to pay an amount defined by a court that could reach up to millions of dollars. This amount would depend on the number of Consumer Law Protection Acts broken, the company’s size, and what other damages have been caused due to Privacy Act and Competition Act violations.
Costs
The Australian Competition and Consumer Commission (ACCC) has announced that they will seek financial penalties and costs against Facebook for their alleged misleading use of consumer data. If the court finds in the ACCC’s favor, a monetary penalty can be issued to Facebook for up to three times the profit made from their alleged illegal activities.
Additionally, costs may also be assessed by the court. These could include reimbursement of any legal expenses incurred by the ACCC in bringing this case. These may also be multiplied if Facebook is found to have engaged in unconscionable conduct or with a “view to profiting from misusing consumer’s data”, as stated by ACCC Chairman Rod Sims.
Conclusion
The Australian Competition and Consumer Commission (ACCC) has filed a case against Facebook in the Federal Court for alleged breaches of the Australian Consumer Law (ACL). The lawsuit alleges that Facebook misled its Australian customers about how their data would be used to make the case for why they should opt-in or grant access to its products.
The ACCC is now seeking declarations, injunctions, financial penalties, and costs from Facebook. The regulator believes that Facebook’s conduct has caused economic loss and detriment to consumers by giving them inadequate information to make informed decisions. The ACCC is also taking action on behalf of consumers who did not understand how their data might be used.
This case serves as a reminder that companies must take careful steps when handling consumer data, as non-compliance with consumer law may result in allegations brought by the regulator. Furthermore, companies must ensure that consumers know all relevant information when granting access or opting-in online.