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Richard J. Lambert was named by Best Lawyers® as a 2021 Corporate Law “Lawyer of the Year.”

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Facebook faces business litigation over fake advertisements

There are few aspects of people’s lives that are not touched by social media. Social media outlets like Facebook and Twitter have changed people’s everyday lives and brought people closer together. This change also extends to many New Jersey businesses, some of which have been fundamentally altered by the rise of social media. With this evolving landscape comes new business litigation as companies adjust to the new medium.

Recently, a business has sued Facebook and two international counterfeit sporting goods companies over their advertisements. This lawsuit has now become a class action suit. The real business sells legitimate sporting goods and jerseys. The company has advertised on Facebook and has a Facebook page for its business. However, the company now claims that its advertisements were undermined by fake ads by the counterfeit companies. At times, these fake advertisements were displayed on the sporting good store’s own Facebook page.

The sporting good company claims that these fake advertisements not only cause the company to lose revenue, but also deter people from shopping with the company and damage its reputation. The company claims that customers see the real ads and associate them with counterfeit goods, which turns people away from the legitimate store.

Facebook, on the other hand, claims that it will defend against the lawsuit. Facebook maintains that the sporting goods company’s suit has no merit and that the social networking company does everything it can to block and remove fake advertisements. Furthermore, Facebook says that on average only about .5 percent of Facebook’s 4.5 million members run into a spam ad every day.

The outcome of this business litigation could affect New Jersey businesses that use social media to advertise their products and services. As social media continues to grow, issues like this one are likely to arise more frequently.

Source: The Washington Post, “Facebook sued by business over counterfeit ads,” Hayley Tsukayama, Oct. 25, 2012

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