Federal Court of Australia

Australian Competition and Consumer Commission v Meta Platforms, Inc. (formerly Facebook, Inc.) [2022] FCA 1062

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the Act), and on the ground that it is necessary to prevent prejudice to the proper administration of justice, there be no publication or other disclosure of Confidential Exhibit MM–10 to the affidavit of Mark McCowan made 17 May 2022 (including any copy thereof), or of the aide memoire titled “Aide Memoire – Comparison of Concise Statement and Statement of Material Facts” prepared by the respondents and used at the hearing on 9 June 2022 (including any copy thereof), other than to the parties and their lawyers, pending the final resolution of proceeding AM/663/2022 commenced in the Magistrates Court of Western Australia (the criminal proceeding).

2.    Subject to further order, Order 1 ceases to have effect if the Statement of Material Facts (of which Confidential Exhibit MM–10 is a copy) is published or otherwise disclosed publicly in the course of, and as part of, the criminal proceeding, before the final resolution of that proceeding.

3.    The respondents’ amended interlocutory application dated 17 May 2022 (the interlocutory application) be otherwise dismissed.

4.    The respondents pay the applicants’ costs of and incidental to the interlocutory application.

5.    Pursuant to s 37AF of the Act, and on the ground that it is necessary to prevent prejudice to the proper administration of justice, there be no publication or other disclosure, before 5.00 pm on 16 September 2022, of the originating application and concise statement filed on 18 March 2022, the respondents’ submissions filed in respect of the interlocutory application, or of the reasons for judgment delivered today, except to the parties and their lawyers.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

Introduction

1    The applicants, Australian Competition and Consumer Commission (the Commission) and Rami Greiss (who holds a delegation from the Australian Securities and Investments Commission (ASIC)), have commenced this proceeding against the respondents, Meta Platforms, Inc. and Meta Platforms Ireland Limited (together, Meta) alleging contraventions of various provisions of the Australian Consumer Law (ACL), being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the C&C Act) and, or alternatively, various provisions of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act).

2    The contraventions are alleged in the alternative because the ACL does not apply, as a law of the Commonwealth, to the supply, or possible supply, of services that are “financial services” or to the supply, or possible supply, of products that are “financial products”: s 131A of the C&C Act.

3    The provisions of the ACL that are alleged to have been contravened are: ss 18, 29(1)(d), (e), (f) and (g), and 34. The provisions of the ASIC Act that are alleged to have been contravened are: ss 12DA(1), 12DB(1)(b), (c), (d) and (e), and 12DF(1).

4    The applicants (who, for convenience, I will simply call the Commission) claim declaratory relief, pecuniary penalties, injunctive relief, an order for a compliance program, an adverse publicity order or an order for corrective advertising, and costs.

5    Meta provides an online social network service (the Facebook service) which is accessible through the Facebook website and associated mobile applications (the Facebook platform). In Australia, approximately 18 million users access the Facebook service each month; 14 million users access the service each day.

6    The alleged contraventions are in respect of, or arise out of, the publication of “sponsored posts” (advertisements) on the Facebook platform relating to cryptocurrency investments. The advertisements, which are said to be targeted to Australian users of the Facebook service, involve “celebrity endorsement”, using well-known public figures. The Commission alleges that the advertisements contain words and images that represent that the public figures use or endorse the investment scheme being promoted. The Commission alleges that the promoted investment schemes are scams through which funds, paid by the investors, are misappropriated by those promoting the schemes. The Commission also alleges that the public figures, used for the “celebrity endorsement”, have not invested in or endorsed the schemes.

7    The Commission commenced the proceeding by filing an originating application and a concise statement (together, the initiating process). On 17 May 2022, Meta filed an amended interlocutory application (the interlocutory application) seeking an order under s 37AF of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) that there be no publication of the initiating process or, alternatively, certain parts of the initiating process until the final resolution of a private prosecution commenced in the Magistrates Court of Western Australia against Meta Platforms, Inc. by one of the public figures used in the advertisements for celebrity endorsement, Dr Andrew Forrest AO (the criminal proceeding). Meta also seeks corresponding orders preventing inspection of the Court’s file in respect of these documents.

8    Meta seeks similar orders in relation to Confidential Exhibit MM–10 exhibited to the affidavit of Mark James McCowan made on 17 May 2022, and its written submissions in support of its interlocutory application.

9    Meta seeks the orders under s 37AF on the basis that such orders are necessary to prevent prejudice to the proper administration of justice (s 37AG(1)(a)) in that, absent the orders, there is a real risk that publication of the initiating process will prejudice the ability of Meta Platforms, Inc., in the criminal proceeding, to receive a fair trial.

10    The Commission opposes Meta’s application.

The criminal proceeding

11    Dr Forrest commenced the criminal proceeding against Meta Platforms, Inc. by filing a Prosecution Notice dated 31 January 2022. This was before the commencement of this proceeding.

12    The Prosecution Notice details three alleged offences under s 400.7(2) of the Criminal Code (being the Schedule to the Criminal Code Act 1995 (Cth)). The gravamen of these offences is dealing with property (here, a computer cluster) where there is a risk that the property will become an instrument of crime, in circumstances where the accused is reckless as to the fact of that risk. The offences are alleged to have been committed by Meta Platforms, Inc. in the period February to April 2019.

13    The evidence relied on by Meta as to the status of the criminal proceeding, and its likely progress, is scant. It is based, in part, on information that Mr McCowan sourced from a report of the criminal proceeding in The West Australian newspaper on 29 March 2022. The report noted that Meta Platforms, Inc. had not appeared at a court hearing, but had sent a letter to the Magistrates Court stating that that court “had no jurisdiction”.

14    The lawyers acting for Meta in this proceeding are not the lawyers acting for Meta Platforms, Inc. in the criminal proceeding. Even so, it is strange that Meta did not place more reliable and informative evidence before the Court on this subject. It is also unfortunate that Meta has not been more forthcoming about Meta Platforms, Inc.’s intentions with respect to that proceeding. If the contention—that the criminal proceeding is defective for want of jurisdiction—is one of substance, then it undermines the basis of Meta’s present application. Absent the criminal proceeding, there is no need for the s 37AF orders that Meta seeks.

15    With this consideration in mind, the Commission contends that any order under s 37AF that the Court might be minded to make should be confined, in time, to the earlier of Meta Platforms, Inc. entering a plea of guilty in the criminal proceeding; a direction being made that the trial of the criminal proceeding be by judge only; or final resolution of the criminal proceeding. Meta accepts that this limitation is appropriate if a s 37AF order is to be made.

16    In the meantime, the present application has proceeded on the basis that there is a prospect that the criminal proceeding will remain on foot and be heard as a jury trial at some time in the future.

17    Mr McCowan, Meta’s solicitor on the record, has consulted a legal practitioner in Western Australia who specialises in criminal law in that State. Based on the information he has received, Mr McCowan says that, if, in fact, the criminal proceeding progresses by way of indictment, the trial of the charges is likely to occur within approximately 2 to 2 ½ years. Meta has indicated that Meta Platforms, Inc. does not presently consent to the criminal proceeding progressing other than by indictment: see ss 4G and 4J of the Crimes Act 1914 (Cth).

18    A document entitled “Statement of Material Facts” is in evidence before me as Confidential Exhibit MM–10. It seems that this document has been deployed in the criminal proceeding, although Meta has not explained how it has been deployed beyond the generalised explanation that, in Western Australian criminal proceedings, a statement of material facts:

(a)    contains an investigating officer’s opinion of the facts;

(b)    is only ever relied upon if an accused pleads guilty;

(c)    is not ordinarily made public;

(d)    would not be admitted as evidence in a prosecution because of the ordinary rules of evidence;

(e)    would not be provided to, or permitted to be read by, a jury; and

(f)    if released to the public, would entitle an accused to apply for a permanent stay of the prosecution on the basis that the statement may come to the attention of prospective jurors and prejudice their views of the allegations.

19    Meta relies on this document to show that there is considerable overlap in the factual allegations made in this proceeding and the factual allegations which inform the charges in the criminal proceeding. I do not understand this proposition to be disputed.

The factual allegations in the initiating process

20    The concise statement describes Meta’s operation of the Facebook platform in the following general terms.

21    Meta collects detailed personal information about the users of its service from the Facebook platform and from their activities on other websites and apps. The concise statement refers to the information from these activities as User Data Points. Meta processes the User Data Points using multiple layers of machine learning (which the concise statement describes as the Facebook Algorithms) so that users see, on the Facebook platform, the information that Meta predicts will be most relevant to those users. This includes targeting particular advertisements to users who, based on their User Data Points, are similar to other users who have engaged with the same advertisement, clicked through to the landing page linked to the advertisement, or taken other actions nominated by the user. In this way, the targeting of a particular advertisement is continuously refined to focus on particular users.

22    Meta generates substantially all its revenue from advertisers. This revenue is often tied to performance metrics, including whether the advertisement generates a “conversion”, such as by the user clicking through to a landing page linked to the advertisement. The Commission contends that it is in Meta’s commercial interest, and a key part of its business, to target users who are most likely to click on the link in an advertisement to visit the advertisement’s landing page.

23    Meta provides users with the ability to place advertisements on the Facebook platform using an automated self-service function and an “ad auction process”, both of which enable the advertiser to specify parameters for the advertisement’s target audience. The concise statement describes this as the Automated Advertising Process. Meta uses the Facebook Algorithms to determine which advertisement to display to a specific user, and how that advertisement should be presented (in terms of size, placement, and positioning) to target users who are predicted to engage with the advertisement. Meta provides reports to advertisers about the kinds of users viewing their placed advertisements, and how those advertisements are “performing”. Advertisers can use certain measurement tools provided by Meta to monitor the performance of their advertisements and to optimise the performance of those advertisements.

24    The concise statement says that advertising on the Facebook platform differs from traditional media advertising because it relies upon the Automated Advertising Process and because it allows advertisers to target advertisements to particular Facebook users via the deployment of the Facebook Algorithms.

25    The concise statement then describes the placement, on the Facebook platform, of the advertisements (to which I have referred) that use celebrity endorsement to promote fraudulent cryptocurrency investments. The concise statement refers to these advertisements as Fake Celebrity Endorsement Ads and to the landing pages as Deceptive Landing Pages. Annexure A to the concise statement provides an example of an advertisement and a landing page associated with an advertisement using the (alleged) endorsement of the well-known Australian public figure, Dick Smith.

26    The concise statement alleges that, since at least September 2018, Meta has received complaints about this form of advertising. It alleges that, after receiving such complaints, Meta has generally stopped displaying the particular advertisement. It further alleges, however, that Meta has continued to display the same advertisement submitted through another advertiser account, and to target other users of the Facebook platform who, it predicts (using the Automated Advertising Process), will engage with that advertisement. The concise statement alleges that Meta also continues to display other versions of advertisements—depicting the same public figure or other public figures—that are linked to the same or similar versions of the landing page related to the impugned advertisement.

27    The concise statement alleges that the continuation of this activity serves Meta’s commercial purposes because Meta continues to earn revenue in respect of each user who engages with these advertisements and clicks through to the landing page linked to the advertisement, or otherwise generates a “conversion”.

28    The concise statement also alleges that Meta has been aware of the following matters.

29    First, “bad actors” (an expression coined by Meta) are able to use and exploit the Automated Advertising Process and the Facebook Algorithms to achieve their own deceptive and fraudulent purposes, including tracking users who fall for scams and then targeting advertisements to other users who are predicted to engage with the advertisement.

30    Secondly, since at least October 2017, public figures around the world have complained to Meta that their names and images have been used, without consent, in a misleading manner in advertisements published on the Facebook platform.

31    Thirdly, since at least January 2018, a significant proportion of cryptocurrency trading schemes promoted by advertisements on the Facebook platform have used misleading or deceptive promotional practices. Approximately 50% of these advertisements involve (what Meta describes as) “violations of user trust policies and scams”.

32    Fourthly, since at least April 2018, advertisers who submit Fake Celebrity Endorsement Ads linked to Deceptive Landing Pages on the Facebook platform often take steps to show different content for the landing pages to avoid review, by Meta’s automated review systems, of the true content of the landing pages.

33    Fifthly, since at least 1 October 2018, the Commission has been concerned about Fake Celebrity Endorsement Ads linked to Deceptive Landing Pages.

34    Sixthly, since at least March 2019, there has been a worldwide problem on the Facebook platform of advertisements promoting goods and services involving fake public figure endorsements, which Meta calls “Celeb-Bait”.

35    The concise statement alleges that, despite Meta’s knowledge of these matters, it has failed to take sufficient steps to prevent the publication of Fake Celebrity Endorsement Ads linked to Deceptive Landing Pages on the Facebook platform, even though it:

(a)    represents to users that it collects information to: verify accounts and activity; combat harmful conduct; detect and prevent spam and other bad experiences; maintain the integrity of its products; and promote safety and security;

(b)    has advertising policies that prohibit advertisements which promote schemes using deceptive or misleading practices and have, with minor exceptions, banned advertisements which promote cryptocurrency trading schemes; and

(c)    reviews all advertisements and associated landing pages using automated tools and, in some instances, human review, in an attempt to assess compliance with its advertising policies.

36    The concise statement alleges that Meta has the technical ability, but has not used that ability, to place warnings on advertisements featuring a public figure (who has been used in Fake Celebrity Endorsement Ads and/or in advertisements that link to Deceptive Landing Pages) to inform users that advertisements, placed on the Facebook platform, have previously falsely suggested that the public figure concerned endorses a money-making scheme or scheme involving a cryptocurrency investment.

37    The concise statement alleges that, by publishing the Fake Celebrity Endorsement Ads linked to Deceptive Landing Pages on the Facebook platform, Meta has engaged in conduct that is misleading or deceptive or likely to mislead or deceive, or liable to mislead the public, in various ways. It also alleges that Meta has falsely represented to users in Australia that the public figures featured in the advertisements have approved, endorsed, supported and/or acquired the services of, or invested in, a money making scheme connected with the Fake Celebrity Endorsement Ad. It alleges that Meta has contravened various provisions of the ACL and/or the ASIC Act, as I have already noted. It also alleges that the scam advertisers have contravened various provisions of the ACL and/or the ASIC Act and that Meta is liable as an accessory in respect of those contraventions.

38    The concise statement alleges that Meta’s conduct has caused harm to consumers and to the reputations of the public figures featured in the Fake Celebrity Endorsement Ads, despite the latter having made known to Meta that they have not approved, endorsed, supported or acquired the services of, or invested in, the scheme being advertised.

Relevant principles

39    Section 37AF of the Federal Court Act relevantly provides:

(1)     The Court may, by making a suppression order or non‑publication order on grounds permitted by this Part, prohibit or restrict the publication or other disclosure of:

(a)     …; or

  (b)     information that relates to a proceeding before the Court and is:

(i)    information that comprises evidence or information about evidence; or

(ii)     information obtained by the process of discovery; or

(iii)    information produced under a subpoena; or

(iv)    information lodged with or filed in the Court.

(2)     The Court may make such orders as it thinks appropriate to give effect to an order under subsection (1).

40    As I have said, Meta seeks the order on the basis that it is necessary to prevent prejudice to the proper administration of justice: s 37AG(1)(a) of the Federal Court Act.

41    In Country Care Group Pty Ltd v Director of Public Prosecutions (Cth) (No 2) [2020] FCAFC 44; 275 FCR 377 (Country Care), the Full Court said (at [7] –[9]):

7    The relevant principles in relation to the making of suppression or non-publication orders under s 37AF of the FCA Act are fairly well settled.

8    Suppression or non-publication orders should only be made in exceptional circumstances: Rinehart v Welker (2011) 93 NSWLR 311 (Rinehart v Welker) at [27]; Rinehart v Rinehart (2014) 320 ALR 195 (Rinehart v Rinehart) at [23]. That is both because the operative word in s 37AG(1)(a) is “necessary” and because the court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: Rinehart v Welker at [32]; Rinehart v Rinehart at [25]. The paramount consideration is the need to do justice; publication can only be avoided where necessity compels departure from the open justice principle: Rinehart v Welker at [30]; Rinehart v Rinehart at [26].

9    The critical question is whether the making of a suppression or non-publication order is “necessary to prevent prejudice to the proper administration of justice”. The word “necessary” in that context is a “strong word”: Hogan v Australian Crime Commission (2010) 240 CLR 651 (Hogan) at [30]. It is nevertheless not to be given an unduly narrow construction: Fairfax Digital Australia and New Zealand Pty Ltd v Ibrahim (2012) 83 NSWLR 52 (Ibrahim) at [8], citing Hodgson JA in R v Kwok (2005) 64 NSWLR 335 at [13]. The question whether an order is necessary will depend on the particular circumstances of the case. Once the court is satisfied that an order is necessary, it would be an error not to make it: Hogan at [33]. There is no exercise of discretion or balancing exercise involved: Australian Competition and Consumer Commission v Air New Zealand Ltd (No 3) [2012] FCA 1430 at [21].

42    In that case, the appellants were charged with criminal cartel offences under the C&C Act. They had applied for an order severing and staying certain charges. Their application was dismissed by the primary judge. The Full Court dismissed the appellants’ appeal. The Full Court made a limited order restricting publication of its reasons for judgment, which it extended for a further limited period. The question was whether the order should be further extended.

43    The appellants contended that the existing non-publication should be extended because there was a risk that jurors or prospective jurors would read the Full Court’s reasons for judgment and be “improperly influenced by extraneous material” or be “infected with the knowledge of matters other than the evidence in the proceedings”.

44    The Full Court was not satisfied that any form of non-publication order in respect of the reasons for judgment was necessary to prevent prejudice to the proper administration of justice having regard to the particular circumstances of the case. The Full Court did accept, however, that there may be cases where the risk of prejudice to an accused in a forthcoming criminal trial is such that such an order is necessary.

45    In coming to its conclusion, the Full Court rejected an apparent contention that information or material in the reasons for judgment would give rise to a risk of prejudice to the appellants or their right to a fair trial. The Full Court was not persuaded that any juror who, somehow, read the reasons for judgment might be “improperly influenced by” or “infected with” prejudicial material:

19    While it may be correct that the Judgment includes a short summary of the prosecution’s factual case, it is equally clear that the summary is expressed in neutral, if not anodyne, terms. More significantly, the summary is immediately preceded by the statement that the facts as set out are “no more than allegations” drawn from the notice of prosecution case, some of which may well be disputed at trial, and that it may ultimately turn out to be the case that the prosecutor will not be in a position to prove them: Judgment at [9]. The submission by the first and second appellant that a “non-skilled reader” may not understand this statement, and may instead read the summary of facts as if it was the Court’s conclusion concerning the facts, cannot be accepted. The statement could not be clearer. No reasonable reader of the Judgment would understand the summary of facts to be the Court's findings or conclusions about the facts.

20        The third appellant’s characterisation of the summary of facts in the Judgment as being the Court’s provisional view about the facts which a potential juror may regard as “determinative” likewise cannot be accepted. The summary of facts is not stated to be the Court’s provisional view about the facts. Indeed, quite the contrary. It is clearly stated that the summary of facts is drawn from the notice of case for the prosecution and, as already noted, it is clearly emphasised that the facts as stated are mere allegations which the prosecutor may not ultimately be able to prove.

46    In Commonwealth Director of Public Prosecutions v Citigroup Global Markets Australia Pty Limited (No 2 – Application for non-publication orders) [2021] FCA 787 (Citigroup), Wigney J rejected a similar application, saying (at [44]):

44    … even if potential jurors read any media articles reporting on the Judgment at the time they are published, or jurors read those articles as a result of internet searches during the trial, there is in any event nothing in the Judgment that gives rise to any risk of prejudice to the accused or their right to a fair trial. As has already been noted, while the Judgment contains a brief summary of the prosecution case, it is clearly stated that the summary is drawn from the Notice and comprised mere allegations, many of which were likely to be disputed and contested at trial. There is no basis for the apparent assertion that any media reports concerning the Judgment will not report that the prosecution case as outlined in the Judgment comprises mere allegations. In any event, ordinary readers of such media reports are likely to understand that to be the case.

47    In Australian Competition and Consumer Commission v BlueScope Steel Limited [2019] FCA 1532 (BlueScope), the Commission itself sought an order restricting the disclosure of the originating application and concise statement by which it had commenced proceedings for alleged cartel conduct. The application was supported by the other parties to that proceeding, but opposed by a media outlet.

48    The Commission had issued a media release at the time that the proceeding was commenced. The media release informed the public that it had commenced the proceeding seeking pecuniary penalties and other civil remedies because the applicable limitation period for bringing such proceedings was about to expire. The media release also stated that the conduct the subject of the proceeding was currently being considered by the Commonwealth Director of Public Prosecutions.

49    The media release generated a number of media articles, particularly in the business press. O’Bryan J was satisfied that there was considerable media interest in the story. His Honour also noted that the originating application and the concise statement contained more detail than the media release itself.

50    The parties contended that reporting the allegations in the originating application and the concise statement would create the risk of “contaminating” the jury pool for any future criminal prosecution, particularly given that any future criminal proceeding may take a “different shape” to the civil proceeding that had been commenced. As O’Bryan J explained (at [13]):

13        … the CDPP may decide to prosecute only certain instances of the conduct that is the subject of allegations made in the civil proceeding. Further, aspects of the conduct alleged in the civil proceeding may be excluded by the different rules of evidence which apply in criminal proceedings. The concern that arises is that potential jurors for a future criminal trial will be exposed to media reporting of the allegations made in the present civil proceeding which are not part of the Crown’s case in the criminal proceeding. That creates a risk that potential jurors will prejudge issues or have regard to extraneous matters, thereby damaging the ability of the accused to receive a fair trial. The ACCC submitted that the risk of prejudice to a criminal accused has long been recognised as a basis for suppressing information relating to actual or contemplated criminal proceedings, relying on R v Clement (1821) 4 B & Ald 218; 106 ER 918 and R v Horsham Justices, ex parte Farquharson [1982] QB 762 at 791.

51    O’Bryan J declined to make an order under s 37AF of the Federal Court Act. At [34] – [38], his Honour held:

34    The first basis on which the parties seek the suppression order is to reduce the risk of contamination of the jury pool for any future criminal prosecution that may be commenced in respect of the alleged cartel conduct. It is not uncommon for courts to make suppression orders in relation to material revealed in the course of one proceeding which has the potential to interfere with another proceeding. That circumstance most commonly arises where an individual accused faces sequential trials in respect of different but similar criminal activity (see, for example, Mokbel and Quami), or where there are sequential trials of different accused in respect of the same criminal activity (see, for example, R v Note Printing Australia Ltd (Ruling No 2) [2012] VSC 304).

35        However, as The Age correctly submitted, courts have long held that juries should not be considered as fragile or prone to prejudice: see the authorities referred to by Spigelman CJ in John Fairfax at [103]-[110]. The High Court has stated on numerous occasions that the mere possibility that a juror will have been exposed to prejudicial but irrelevant information prior to trial will not ordinarily deprive an accused of a fair trial. As observed by Mason CJ and Toohey J in R v Glennon (1992) 173 CLR 592 at 603:

    The possibility that a juror might acquire irrelevant and prejudicial information is inherent in a criminal trial. The law acknowledges the existence of that possibility but proceeds on the footing that the jury, acting in conformity with the instructions given to them by the trial judge, will render a true verdict in accordance with the evidence … to conclude otherwise is to underrate the integrity of the system of trial by jury and the effect on the jury of the instructions given by the trial judge.

36        The approach taken by Australian courts has not altered in the “internet age” where historic publications can be more readily searched and obtained: Dupas v The Queen (2010) 241 CLR 237.

37        In my view, the suppression order sought by the parties is not justified on the first basis on which it is sought. That is for two reasons which are cumulative. First, the risk of prejudice to a fair trial in any future criminal prosecution is, in my view, remote. Second, any such risk of a juror learning of prejudicial but ultimately irrelevant allegations or information can be adequately mitigated by the usual jury directions.

38    The following factors in combination lead me to the conclusion that, in the present case, the risk of prejudice to a fair trial is remote:

(a)     No criminal trial has yet been commenced and it is not possible to assess the likelihood of a criminal trial being commenced.

(b)     Even if a criminal trial were to be commenced, the trial would be unlikely to occur for at least 12 months and potentially longer. Any reporting of the allegations in this proceeding would, by that time, be a long way in the past.

(c)     The allegations in the present case concern wrongful business conduct. While the wrongdoing is serious and likely to be harmful to those sections of the public who are consumers of steel products, it is not of a nature that is likely to be of wide interest to the public or to generate particular notoriety or scandal.

(d)     The media releases issued by the ACCC and BlueScope have already made public the main aspects of the allegations made against BlueScope and Mr Ellis. While the originating application and the concise statement contain more details of the alleged offending in comparison to the media releases that have been issued, the information contained in those documents is at a relatively high level of generality. For that reason, the likely impact of any further reporting of the originating application and the concise statement on potential jurors will be limited.

(e)     The publication of allegations, as distinct from evidence or findings, made in a civil proceeding are unlikely to cause prejudice to a subsequent criminal trial involving the same or similar allegations. The circumstances of this case are not comparable to the typical case in which a suppression order is sought in respect of the evidence adduced or findings made in a proceeding that may prejudice a subsequent criminal proceeding.

52    At [39], his Honour returned to the question of jury directions and accepted that if there was a material risk that publication of information would be likely to prejudice an accused’s ability to receive a fair trial, it may be preferable for the Court to restrict the publication of the information rather than to rely on the effectiveness of directions. In that regard, his Honour referred to the following remarks by Warren CJ and Byrne AJA in News Digital Media Pty Ltd v Mokbel [2010] VSCA 51; 30 VR 248 (Mokbel) at [73]:

73    This confidence in the corporate integrity of juries, however, does not mean that the law should abandon its traditional role of protecting them from events which put this integrity to the test. This role has relied upon the familiarity of the media with the restraints of the law of contempt and their respect for these constraints. It has also relied upon the power of the court to make orders restraining publications which might breach these restraints. In the case of such an order, there will often be the question as to its necessity, and as to its ambit; an order should not be made unless this be necessary and, if made, it must be no wider in its terms and its duration than is necessary to ensure that, as far as possible, the apprehended risk to the pending proceeding is removed.

(Footnote omitted.)

53    In its submissions, Meta sought to distinguish the facts and circumstances of these cases from the facts and circumstances of the present case. I accept that there are differences. Naturally, I accept that each case must be determined according to its own facts and circumstances. Nevertheless, the cases to which I have referred remain as helpful illustrations of how an application for an order under s 37AF of the Federal Court Act is to be approached, and of the abiding importance of the principle of open justice: see s 37AE of the Federal Court Act.

Meta’s submissions

54    Meta submits that the concise statement is cast at a high level of generality, and provides but one example of specific conduct (the conduct illustrated by Annexure A thereto). It nevertheless submits that disclosure of the concise statement to the public would disseminate the following “allegations”:

(a)    Meta Platforms, Inc.’s conduct involved legal wrongdoing;

(b)    the targeted delivery of scam advertisements serves Meta Platforms, Inc.’s commercial purposes and Meta Platforms, Inc.has “profiteered off fraudulent conduct”;

(c)    Meta Platforms, Inc. had the means to prevent the scams but did not;

(d)    Meta Platforms, Inc. made the misleading representations alleged against it; and

(e)    Meta Platforms, Inc. took advantage of users’ trust of the public figures featured in the advertisements.

55    Meta submits that, while this proceeding and the criminal proceeding involve different legislative regimes involving different legal tests, the gravamen of the conduct alleged in the criminal proceeding appears to be subsumed in the contravening conduct alleged in this proceeding. As Meta puts it:

Dr Forrest invokes the criminal law to seek to make [Meta Platforms, Inc.] liable for certain allegedly misleading cryptocurrency scam advertisements published by third-party users on the Facebook service; the [Commission seeks] to do the same through civil penalties.

56    Meta submits that five considerations are of particular weight in the present case.

57    First, Meta submits that this proceeding is likely to involve substantial reporting given: the prevalence and popularity of the Facebook service in Australia; the significant public profiles of the other participants in both proceedings; and the nature of the allegations (which will likely be of interest to the media and “the vast majority of potential jurors” in a way that is not common in civil proceedings). Meta submits that the media coverage of both proceedings to date, which has involved linking the two proceedings, indicates the likely widespread and sustained future reporting of this proceeding.

58    Secondly, Meta submits that, because this proceeding involves two high-profile and respected regulators with model litigant responsibilities, members of the public, reading that reportage, would likely assume that the allegations made in the proceeding can be substantiated. Thus, some jurors in the criminal proceeding, with knowledge of the allegations in this proceeding, would reason that the existence of this proceeding adds weight to the allegations in the criminal proceeding.

59    Thirdly, Meta submits that, if the initiating process were to be published, there would be a risk that potential jurors in the criminal proceeding, knowing of that reportage, would form the impression that Meta Platforms, Inc. had not only engaged in the conduct the subject of the criminal charges but, additionally, had engaged in more widespread conduct of a similar character, causing significant harm to Facebook users and significant financial losses over a lengthy period of time.

60    Fourthly, Meta submits that the concise statement is akin to a prosecution case statement, which, ordinarily, would not be made public. Meta submits that “(i)t would be an incongruent outcome if allegations of broader compass than those contained in the Material Facts [in the criminal proceeding] were published in these circumstances”.

61    Fifthly, Meta submits that the Commission’s public commentary to date has “aggravated the prejudicial impact of future publication” by linking this proceeding and the criminal proceeding and by using “emotive language, matters of opinion, and matters designed to attract public outrage”.

62    In this connection, Meta points to a press release made by the Commission on the day this proceeding was commenced, and the publicity given to that press release. I have reproduced the relevant part of the press release in a Schedule to these reasons.

63    In support of these submissions, Meta adduced evidence of the reportage of the criminal proceeding and of this proceeding in print media (there is also evidence of some television and radio reporting). A number of the reports dealing with the commencement of this proceeding include quotations from the Commission’s press release. Some reports of the commencement of this proceeding refer to Dr Forrest as one of the celebrities who has featured in the advertisements. Some reports refer to the existence of both proceedings.

Conclusion

64    Subject to dealing with Meta’s alternative case, I am not satisfied that the orders it seeks under s 37AF of the Federal Court Act are necessary to prevent prejudice to the proper administration of justice.

65    I accept that the existence of this proceeding will, from time to time, give rise to media reports in a number of outlets and that the reportage will likely link this proceeding with the criminal proceeding. I accept that, on being exposed to that reportage, some members of the public will be likely to view both proceedings as raising related issues of fact and, perhaps, law (even though I acknowledge that the two proceedings raise fundamentally different legal issues), and view the complaint made in the criminal proceeding as an aspect of a wider complaint made in this proceeding (in that, in this proceeding, the false celebrity endorsements, used in the advertisements, concern a number of high-profile individuals, not just Dr Forrest).

66    I do not accept that matters of detail in the initiating process will be of particular interest to members of the public or are likely to be given wide circulation. However, I do accept that the general nature of the allegations made in the initiating process—the “story”—will be of interest to many members of the public.

67    That said, the general nature of the allegations made in the initiating process has already been made public, and remains in the public domain, through publication of the Commission’s press release made at the time that this proceeding was commenced. The publication of the press release was newsworthy because it marked the commencement of this proceeding. However, as the evidence shows, the complaint made in this proceeding was not new at that time. Since at least January 2019, a number of articles have been published in news media circulating in Australia about fake celebrity-endorsed advertising in social media, particularly (but not exclusively) on the Facebook platform. The evidence also shows that three public figures—Mr David Koch, Mr Dick Smith, and Mr Mike Baird—have used social media, including the Facebook platform, as well as other forms of publicity, to denounce the false use of their names, images, and other indicia in scam advertising in social media, including on the Facebook platform.

68    Therefore, the reportage generated at the time of commencement of the criminal proceeding, and at the time of commencement of this proceeding, was part of what can be seen as an extant, but intermittently reported, news story about advertising on social media, including on the Facebook platform, involving scams that falsely use the endorsement of high-profile individuals.

69    I do not accept Meta’s contention that the Commission’s press release used emotive language designed to attract public outrage. Nor do I accept that the language used in the press release was (in Meta’s words) “inflammatory”. The press release sets out the basis of the Commission’s case against Meta, including the following matters, all of which are expressed as allegations:

(a)    Meta has engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australian public figures;

(b)    the alleged conduct is in breach of the ACL or the ASIC Act;

(c)    Meta aided and abetted, or was knowingly concerned in, false or misleading conduct and representations by the advertisers concerned;

(d)    the advertisements promoted investment in cryptocurrency or money-making schemes, and were likely to mislead Facebook users into believing the schemes were associated with well-known individuals featured in the advertisements;

(e)    the schemes were scams, and the people featured in the advertisements had never approved or endorsed them;

(f)    Meta is responsible for the advertisements that it publishes on the Facebook platform;

(g)    it is a key part of Meta’s business that advertisers are enabled to target users who are most likely to click on the link in an advertisement to visit the advertisement’s landing page, using Facebook algorithms;

(h)    visits to landing pages from advertisements generate substantial revenue for Meta;

(i)    Meta was aware that celebrity endorsement cryptocurrency scam advertisements were being displayed on the Facebook platform, but did not take sufficient steps to address the issue;

(j)    these advertisements were still being displayed on the Facebook platform even after public figures around the world had complained that their names and images had been used in similar advertisements without their consent;

(k)    Meta’s technology enabled the advertisements to be targeted to users most likely to engage with the advertisements;

(l)    Meta assured its users it would detect and prevent spam and promote safety on Facebook, but it failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam advertisements on its pages or warn users;

(m)    Meta should have been doing more to detect, and then remove, false or misleading advertisements on the Facebook platform, to prevent consumers from falling victim to ruthless scammers;

(n)    apart from resulting in untold losses to consumers, the advertisements also damage the reputation of the public figures associated with the advertisements;

(o)    Meta failed to take sufficient steps to stop fake advertisements featuring public figures, even after those public figures reported to Meta that their name and image were being featured in celebrity endorsement cryptocurrency scam advertisements;

(p)    the Commission is seeking declarations, injunctions, penalties, costs and other orders.

70    The statements expressed as allegations in the press release are largely, but not completely, coextensive with the allegations made in the concise statement. Meta’s alternative case for a s 37AF order in relation to the initiating process (as to which, see [77] to [83] below) relies, substantially, on certain differences between the statements made in the press release and the allegations made in the concise statement.

71    In submissions, Meta drew attention to a part of the press release that referred to “one shocking instance” of where a consumer lost more than $650,000 due to one of the scams being falsely advertised on the Facebook platform as an investment opportunity. The then Chairman of the Commission, Mr Sims, is quoted in the press release as saying: “This is disgraceful”.

72    Although Meta regarded this to be an example of emotive language designed to attract public outrage, it seems to me that readers of the press release would see these remarks as directed more to the particular scam and its consequences for the victim. I accept, however, that the remarks appear to be intended to underscore the seriousness of Meta permitting the advertisements to appear on the Facebook platform. Importantly, however, these remarks are made in the press release, not in the initiating process.

73    Given the existence of the press release, and its continuing availability as a publication, and given the already existing public commentary on scam advertising on the Facebook platform, as well as on other social media, I do not see how it can be argued, cogently, that any publication of the initiating process itself could materially prejudice a fair trial of the criminal proceeding.

74    Moreover, on Meta’s own evidence, any jury trial of the criminal proceeding will not take place until sometime in the relatively distant future. Just as O’Bryan J observed in BlueScope, by the time of any jury trial in the criminal proceeding, any publication of the allegations in the initiating process will be “a long way in the past”. In relative terms, any publicity given to the initiating process will be no more recent than, say, the Commission’s press release.

75    Further, while I take into account the observations made in Mokbel (quoted at [52] above), I also take into account that, at a jury trial of the criminal proceeding, members of the jury will be cautioned, in the usual way, that they should put aside any publicity of which they might be aware concerning the issues raised in the proceeding and base their deliberations only on the evidence before them.

76    I would add two further observations. First, the initiating process contains allegations only. I am satisfied that, whether by direction or otherwise, a jury in any trial of the criminal proceeding will readily understand the difference between allegations, on the one hand, and facts, on the other. I am satisfied that the jurors will understand that they are the tribunal of fact. Secondly, I do not accept Meta’s submission that, as the allegations in this case are made by regulators, they will, inevitably, be given particular credibility, weight, and cogency by a jury. I am not persuaded that, if known by a potential juror, the allegations in the initiating process will be seen as anything other than what they are—allegations that have been made in a legal proceeding.

77    I now turn to the alternative basis on which Meta seeks an order under s 37AF in relation to the initiating process, which concerns the non-disclosure of prayers 7(b)(i) and (ii) of the originating application, and paragraphs 11(c) and 16, and a sentence in paragraph 29, of the concise statement.

78    Prayers 7(b)(i) and (ii) of the originating application seek mandatory injunctions compelling Meta to take certain technical steps after being made aware of a Fake Celebrity Endorsement Ad (including any associated Deceptive Landing Page).

79    Paragraph 11(c) of the concise statement is an allegation concerning the proportion of advertisements for cryptocurrency trading schemes on the Facebook platform that use misleading or deceptive promotional practices.

80    Paragraph 16 of the concise statement is an allegation concerning Meta’s technical ability to place warnings on advertisements published on the Facebook platform.

81    The relevant sentence of paragraph 29 is an allegation concerning Meta’s historical estimate of the money lost by consumers worldwide by signing up to Fake Celebrity Endorsement Ads on the Facebook platform in respect of cryptocurrency trading schemes.

82    The evidence in support of this alternative basis for an order under s 37AF is scant and unpersuasive. Mr McCowan deposes that the allegations made in these paragraphs (by which, I assume, he includes information that may be conveyed by prayers 7(b)(i) and (ii) of the originating application) have not been the subject of any media reporting of which he is aware, and that he has been informed by a Director & Associate General Counsel at Meta Platforms, Inc. that, to the best of her belief, Meta has not made this information public.

83    Taking this evidence at its highest, the mere fact that particular information has not been made public does not mean that it is, necessarily, information that requires protection from disclosure. It certainly does not mean that its non-disclosure, in the context of legal proceedings, is necessary to prevent prejudice to the proper administration of justice. On the evidence before me, I am not satisfied that a s 37AF order should be made in respect of this information.

84    As I have noted, Meta also seeks an order under s 37AF that its written submissions, filed in support of its present application, not be disclosed. I see no reason why such an order should be made.

85    Finally, Meta seeks an order under s 37AF that Confidential Exhibit MM–10 to Mr McCowan’s affidavit of 17 May 2022 (the statement of material facts in the criminal proceeding) not be disclosed, save for the purpose of the criminal proceeding. I am persuaded that it is appropriate to make such an order, given the nature of that document and the need to guard against the risk of its potential misuse if published outside the confines of the criminal proceeding. Parts of that document have been reproduced in a document titled “Aide Memoire – Comparison of Concise Statement and Statement of Material Facts” which was used at the hearing. It is appropriate that, correspondingly, an order under s 37AF be made in respect of that document. I am satisfied that such an order is necessary to prevent prejudice to the proper administration of justice, provided that, in the case of the exhibit, the order is limited to the actual document that is Confidential Exhibit MM–10, or a copy of that exhibit, which has been deployed in the present application, and does not apply to the underlying document of which Confidential Exhibit MM–10 is a copy.

86    The Commission proffered an undertaking to the Court with respect to the non-distribution of the exhibit and the aide memoire. After the hearing, I received further written submissions from Meta directed to whether the proffered undertaking should be accepted. Without descending to the detail of Meta’s submissions in this regard, I have reached the view that the better course is to make an order under s 37AF with respect to both documents.

87    For completeness, I note that, separately, Meta also seeks orders specifically limiting access to documents on the Court’s file. Confidential Exhibit MM–10 and the aide memoire are not on the Court file. Therefore, no order limiting access to those documents, as documents on the Court file, is necessary. No order limiting access to the other documents covered by the reasons, as documents on the Court file, will be made.

Disposition

88    Other than in respect of the non-disclosure of Confidential Exhibit MM–10 and the aide memoire, the interlocutory application will be dismissed. Meta is to pay the Commission’s costs of and incidental to the interlocutory application.

Associate:

Dated:    9 September 2022

Schedule

ACCC takes action over alleged misleading conduct by Meta for publishing scam celebrity crypto ads on Facebook

18 March 2022

The ACCC has instituted Federal Court proceedings against Facebook owner Meta Platforms, Inc. and Meta Platforms Ireland Limited (together: Meta) alleging that they engaged in false, misleading or deceptive conduct by publishing scam advertisements featuring prominent Australian public figures.

The ACCC alleges that this conduct was in breach of the Australian Consumer Law (ACL) or the Australian Securities and Investments Commission Act (ASIC Act). 

It is also alleged that Meta aided and abetted or was knowingly concerned in false or misleading conduct and representations by the advertisers.

The ACCC alleges that the ads, which promoted investment in cryptocurrency or money-making schemes, were likely to mislead Facebook users into believing the advertised schemes were associated with well-known people featured in the ads, such as businessman Dick Smith, TV presenter David Koch and former NSW Premier Mike Baird. The schemes were in fact scams, and the people featured in the ads had never approved or endorsed them.

The ads contained links which took Facebook users to a fake media article that included quotes attributed to the public figure featured in the ad endorsing a cryptocurrency or money-making scheme. Users were then invited to sign up and were subsequently contacted by scammers who used high pressure tactics, such as repeated phone calls, to convince users to deposit funds into the fake schemes.

“The essence of our case is that Meta is responsible for these ads that it publishes on its platform,” ACCC Chair Rod Sims said.

“It is a key part of Meta’s business to enable advertisers to target users who are most likely to click on the link in an ad to visit the ad’s landing page, using Facebook algorithms. Those visits to landing pages from ads generate substantial revenue for Facebook.”

It is alleged that Meta was aware that the celebrity endorsement cryptocurrency scam ads were being displayed on Facebook but did not take sufficient steps to address the issue. The celebrity endorsement cryptocurrency scam ads were still being displayed on Facebook even after public figures around the world had complained that their names and images had been used in similar ads without their consent.

“We allege that the technology of Meta enabled these ads to be targeted to users most likely to engage with the ads, that Meta assured its users it would detect and prevent spam and promote safety on Facebook, but it failed to prevent the publication of other similar celebrity endorsement cryptocurrency scam ads on its pages or warn users,” Mr Sims said.

“Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers.”

“Apart from resulting in untold losses to consumers, these ads also damage the reputation of the public figures falsely associated with the ads. Meta failed to take sufficient steps to stop fake ads featuring public figures, even after those public figures reported to Meta that their name and image were being featured in celebrity endorsement cryptocurrency scam ads,” Mr Sims said.

Facebook failed to prevent the publication of fake ads even after the celebrities reported similar false, misleading or deceptive ads to Meta.”

“In one shocking instance, we are aware of a consumer who lost more than $650,000 due to one of these scams being falsely advertised as an investment opportunity on Facebook. This is disgraceful,” Mr Sims said.

The ACCC is seeking declarations, injunctions, penalties, costs and other orders.