What would you do if you saw your own face being used to advertise a product without your consent?
No doubt you’d get in touch with those in the wrong and ask them to take down the offending advertisements. But suppose that while they agree that they shouldn’t be using your image, and agree not to produce any further, offending advertisements, they refuse to remove the existing material or take any other action.
This is the reported scenario Jessica Buntrock, a skincare blogger, recently found herself in when she discovered unauthorised and photoshopped images of herself being used to market ‘Real Health’ in Sydney’s Bankstown.
But Jessica’s situation is far from unique.
Similar issues arise with the recent scandal over misuse of customer’s personal information by Google. In class actions launched in the US, customers of Facebook have alleged that it engaged in misleading conduct by sharing their information without their consent or knowledge with Cambridge Analytica.
This claim has arisen out of Facebook’s assurance to customers that “your trust is important to us, which is why we don’t share information we receive about you with others unless we have:
- received your permission
- given you notice, such as by telling you about it in this policy; or
- removed your name and any other personally identifying information from it”.
But for the most part, the common, or judge-made, law expects people to look after their own interests.
If a person suffers loss because something they purchased isn’t what it was sold as, the wronged individual may pursue remedies for breach of contract or in tort. The difficulty in making these claims, and their essential impracticability for consumers whose outlays are often small, led to the passage almost a half century ago of several key bits of law.
In 1974, the Trade Practices Act (TPA) came into effect with its revolutionarily simple and effective prohibition on conduct in trade or commerce that is misleading or likely to mislead. It has since been updated with consumer protection in the Australian Consumer Law (ACL) and Australian Securities and Investments Commission (ASIC) Act.
Under this law, a person who suffers loss or damage because of conduct which is misleading is able to access a veritable smorgasbord of remedies, from compensation to rectification, to total refunds.
Never had the law seen such a clear, effective statement against poor commercial practices, combined with a powerful remedial regime. It extended well beyond simple consumer cases to the sorts of complex scenarios illustrated by our blogger and Facebook examples.
But as those earlier examples suggest, this apparently comprehensive scheme may be deficient.
The remedies in the TPA/ACL, broad as they are, focus on compensation for loss. But it can be very difficult to identify any pecuniary loss suffered by the blogger or Facebook customer, particularly where they never would have agreed to licence the use of their image or personal information to the defendant for commercial purposes, or to anyone at all.
Faced with this conundrum, courts have on occasions made defendants pay a reasonable licence fee for the benefit they have received as a result of their misconduct – stretching the courts’ interpretation of loss to breaking point in order to give meaningful redress.
However, there is only so much courts can do within current constraints. In particular, the statutory scheme of remedies doesn’t give the court authority to strip profits from those who breach the Act. This leaves defendants free to engage in a concerted campaign of misleading conduct with a view to massive profits.
The lack of profit-stripping remedy, called, with a total disregard for aesthetics, ‘disgorgement’, may perhaps be related to the remedy’s scarcity in the common law, where the intervention against one person’s gain is considered difficult to justify as a response to another’s loss or breached right.
But, while rare, the remedy is known to the law, in cases like Attorney General v Blake, where the British government brought action for breach of contract when a former spy published a memoir in breach of confidentiality provisions in his employment contract. In the absence of any proven loss, the House of Lords ordered that the profits should be paid over instead.
What is more, profit-stripping remedies are common in the jurisdiction of equity, where it goes by the name of the ‘account of profits’ and is used to great effect as a remedy for cases of misleading conduct such as passing off.
Profit-stripping makes abundant sense as a response to a violation of the statutory prohibition: don’t mislead.
If a person subject to this prohibition still engages in misleading conduct, particularly when they do so deliberately with a view to their own profit, why should they be allowed to keep the profits of their violation, just because no particular person can show a loss, or there is no practically actionable loss?
This difficulty even extends to cases brought by the lead Australian regulator, the ACCC, which in theory doesn’t need to worry about recouping its losses to make its claims worthwhile. In practice, it still has limited resources and must act in an economically efficient way.
Further, while it can seek penalties against those guilty of misconduct, courts have to date been very cautious about the level of penalty awarded and, in particular, have only recently started to consider the relevance of profit in their assessment. This means that egregious patterns of misleading conduct can continue to be highly profitable.
The addition of a profit-stripping or disgorgement remedy for victims of misleading conduct could change that. It would allow people to pursue misleading conduct that offends, while profiting the wrongdoer.
At the very least, surely some punitive or additional damages ought to be made available for cases of egregious misconduct, to deter and punish those who deliberately engage in misleading conduct with a view to profit.
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