Misleading Ads and Facebook Marketplace: When Does It Become a Criminal Offence?

Online marketplace websites are very popular, whether Facebook Marketplace, Gumtree or Etsy, making it easier than ever for private sellers and businesses to sell goods directly to buyers. However, this has also created opportunities for some dodgy practices including false descriptions, counterfeit goods, fake listings and sellers who take payment without ever intending to supply anything.

A common scenario is that an item is advertised, payment is made and the item either does not exist, is substantially different from what was promised, or the seller simply disappears. The important legal question is when that is merely a failed or disputed transaction and when deliberate deception can amount to criminal fraud.

The following outlines when a misleading online advertisement can cross the line into criminal conduct in Western Australia, including when the ‘mere puff’ of a sales tactic turns into a criminally fraudulent act.

Key Takeaways

• A false or inaccurate Facebook Marketplace listing does not automatically amount to a criminal offence; deliberate deception and intent are important.
• Businesses and sellers acting in trade or commerce can face consequences under the Australian Consumer Law (WA), including for certain false representations and accepting payment without intending to supply goods.
• Fraud under the WA Criminal Code can apply where deceit or fraudulent means are intentionally used to obtain property, a benefit or another specified result.
• Police may examine listings, photographs, messages, bank records, other transactions and what happened after payment was received.
• Repeated similar transactions may form part of an investigation, but each allegation must still be considered on its own evidence.

Is It Illegal to Mislead Someone in a Facebook Marketplace Advertisement?

A false or inaccurate statement does not automatically make someone guilty of a criminal offence. There is an important distinction between a mistake, exaggeration, a dispute about the condition or quality of an item, and deliberate deception intended to obtain money or another benefit.

For sellers acting ‘in trade or commerce’, the Australian Consumer Law (WA) (the ‘WA Consumer Law’) contains civil provisions dealing with false representations and accepting payment. These can result in substantial pecuniary penalties (‘fines’), injunctions, compensation orders and other civil remedies.

WA Consumer Law also contains a number of criminal offences which may apply to conduct in trade or commerce. Section 151 creates criminal offences for making specified false or misleading representations in connection with the supply or possible supply of goods or services, or their promotion. The provision covers representations about features such as the standard, quality, value, grade, composition, style or model of goods, whether goods are new and their history or previous use, price, place of origin, and the existence or effect of warranties, guarantees, rights and remedies.

Section 158 also deals with wrongly accepting payment in trade or commerce, such as where a person accepts payment while intending not to supply the goods or services or while intending to supply goods or services materially different from those paid for.

For private conduct outside trade or commerce, or where deliberate deception is alleged, the criminal fraud provisions in the WA Criminal Code may become especially important.

When Can a Facebook Marketplace Sale Amount to Fraud?

Section 409 of the Criminal Code Act Compilation Act 1913 (WA) (the ‘WA Criminal Code’) creates the offence of fraud where a person, with intent to defraud and by deceit or fraudulent means, obtains property, induces another person to deliver property, gains a benefit, causes a detriment or produces another result specified by the section.

This offence carries a maximum penalty of 7 years’ imprisonment, increasing to 10 years’ imprisonment where the person deceived is aged 60 years or older.

In practical terms, the prosecution must establish the required fraudulent intent and deceit or fraudulent means. One common misconception is that a buyer must lose a large amount of money before police can act. Fraud does not depend on a minimum loss of that kind, although the value involved can impact sentence.

Examples of Facebook Marketplace Conduct That Could Lead to Fraud Allegations

Depending on the evidence, allegations of Marketplace fraud could arise from conduct such as:

• advertising an item that does not exist;
• accepting payment with no intention of supplying the item;
• using photographs of another person’s item as though it were the seller’s own;
• deliberately misrepresenting the identity, authenticity or condition of goods;
• repeatedly advertising the same nonexistent product; or
• creating fake profiles or identities to obtain payments.

Whether an offence has occurred will depend on the evidence in the individual case. The fact that a buyer is unhappy or that a transaction fails does not itself establish that the seller intended to defraud them.

Not every enthusiastic description in an online ad is false or misleading in a legally significant way. The law has generally distinguished between vague and obviously exaggerated sales language, sometimes described as ‘puffery’, and a genuine factual misrepresentation.

Saying that your couch is the ‘best in the world’ is unlikely to fall foul of the law, but stating that it is undamaged when it is heavily soiled is a materially different kind of representation.

What If the Seller Intended to Deliver the Item but Something Went Wrong?

Evidence that the seller genuinely intended to supply the item may be inconsistent with an allegation that the seller used deceit to obtain the payment from the outset.

Delayed postage, an accidental error in the listing, disagreement about condition, a misunderstanding between buyer and seller or a transaction that simply falls apart will not necessarily amount to fraud.

A criminal allegation depends heavily on exactly what was represented and what the seller intended or knew at the relevant time.

What Evidence Can Be Used in a Facebook Marketplace Fraud Investigation?

Police may examine the complete transaction rather than the advertisement in isolation. Relevant evidence can include:

• the original listing and photographs;
• Facebook messages and other communications;
• payment and bank records;
• other listings associated with the account;
• communications with other buyers;
• whether the account uses false identifying details; and
• what happened after payment was received.

These materials may be relevant to whether the representation was false, whether the seller knew it was false or whether the seller intended to obtain money or another benefit through deception.

Can Multiple Marketplace Transactions Make the Situation More Serious?

Repeated similar transactions may become relevant to an investigation, particularly where police allege that the same seller advertised nonexistent goods or used similar representations to obtain payments from several people. Multiple alleged transactions can also result in multiple charges.

Repetition does not itself prove guilt. Each allegation still depends on its own evidence, although similarities between transactions may form part of the overall prosecution case where legally admissible.

What If You Are Accused of Facebook Marketplace Fraud?

Not every failed online transaction is fraud. The critical issue is generally whether there was intentional deceit or fraudulent conduct rather than simply a sale that went wrong.

Obtain legal advice before responding to detailed police allegations or participating in a formal recorded police interview.

Author Andrew Williams