Facebook fed inaccurate information to local advertisers for more than a year and is being forced to repay them, casting further doubt over the accuracy of the way the US tech platform collects data.
The tech giant, which has been criticised several times in the last few years over the reliability of its data, is giving free “credits” to multiple local advertisers after it realised it was miscalculating metrics such as the amount of people clicking on an ad on Facebook’s app or how much users prefer one advertiser over another.
Industry sources who spoke on the condition of anonymity said Facebook had apologised to some advertisers and media buying agencies in Australia. The advertisers are being offered one-off make-goods – the opportunity to advertise for free – if they were significantly affected. A Facebook spokeswoman claimed it had affected 0.1 per cent of the local advertising market, but multiple industry sources said that a number of companies across large advertising agencies were affected. The scale of impact is dependent on what the tool was used for.
The inaccurate data was provided to advertisers through a free “conversion lift tool”. The tool helps users understand the effectiveness of their advertisements and some may adjust spend based on the data provided. The global tech giant told affected advertisers the metric was undercounted between August 15, 2019 and August 31, 2020, citing a code error for the mistake.
AFL clubs trying to convert membership payments into tax-deductible gifts are at risk of breaching federal consumer and tax law, and supporters could be left bearing the cost, experts have warned.
Legal experts warn AFL clubs risk breaking the law with potentially misleading membership campaigns
Port Adelaide changed its terms and conditions after questions from ABC News
Membership “pledge” drives come as coronavirus restrictions undermine club revenues
With the likelihood that members will be locked out of attending games for the foreseeable future, clubs have begun pleading with members not to seek refunds, instead urging them to convert some or all of their membership payment into a tax-deductible donation.
Several clubs are seeking the donations via a third party — the Australian Sports Foundation — because sporting clubs are not charities and cannot offer tax-deductible status themselves.
In some instances, members who choose to convert their payments to donations are being offered benefits in return including store vouchers, discounts and entries to competitions to win houses and cars.
But legal experts say the clubs are walking a fine line, because tax law requires tax-deductible gifts or donations to be made out of the kindness of the donor’s heart, and cannot be in return for material benefits.
“By blurring the proposals on membership with several benefits and tax deductibility, it is likely that members may assume they can get both the benefits and the tax deduction — that is not the case,” said Murray Baird, a not-for-profits law expert and former Assistant Commissioner to the Australian Charities and Not-for-profits Commission.
“This risks breaches of both consumer law and tax law.”
Dr Natalie Silver, a Sydney University expert in not-for-profits regulation, said prospective members should carefully read their clubs’ terms and conditions before signing on for a 2020 membership, adding that some of the clubs’ 2020 membership promotional material seems misleading.
“Those members who have not read the fine print may be unhappy when they become aware that the entire amount is not tax deductible,” Dr Silver said.
Club approaches differ
Some clubs have been careful to draw the distinction.
Essendon has told its supporters that they will receive no material benefit whatsoever from their membership, if they convert it to a fully tax-deductible donation.
The West Coast Eagles have warned supporters that choosing to donate part of their membership “may preclude match access without further payment” if governments decide to ease coronavirus restrictions later in the year to allow attendance at AFL games.
But others are less clear.
The Adelaide Crows, which are offering donors a chance to win a car, have advised members that $40 of their pledge will not be tax deductible because it represents the value of the benefits they will receive.
Last week, Port Adelaide advised members they could “pledge the full amount [of their membership] to the club, with the option to make it a tax-deductible donation”.
But after being contacted for comment on this story, the club changed the wording to make clear that only “a portion of their pledge” would be treated as a tax-deductible donation.
Both clubs listed tax deductibility alongside material benefits in promotional material they sent to supporters last month, although the Crows applied an asterisk: “*if applicable”.
A Port Adelaide spokesperson said the club’s priority had been to provide its members with “options to suit their circumstances” and it had worked with the Australian Competition and Consumer Commission (ACCC) to ensure it complied with all laws.
An Adelaide Crows spokesperson said the club had “sought and received relevant approvals and legal advice” and consulted with the Australian Sports Foundation on its “pledge” campaign.
The AFL and the ACCC both confirmed they had engaged in dialogue with clubs about the campaigns.
The ACCC said it had been engaging with clubs and was “continuing to monitor issues relating to sport club membership refunds, credit and ongoing charges and encourages all clubs to treat members fairly in these exceptional circumstances”.
“Clubs may take different approaches to addressing consumers’ requests,” an ACCC spokesperson said.
Declarations ‘appropriately clear’
The Australian Tax Office said it could not comment on the affairs of individual entities, but a spokesperson confirmed that under Australian law, “there must not be any benefit provided to the [club] member for the donation made”.
Australian Sports Foundation CEO Partick Walker told ABC News he believed the clubs’ declarations about 2020 membership had been “appropriately clear”.
“[And] we are not responsible for drafting or reviewing those communications.”
The foundation raised $18.9 million for elite sporting teams last financial year, as well as $12.4 million for grassroots sport.
Mr Walker said the Australian Sports Foundation was helping keep clubs sustainable as they endure the crippling financial impact of coronavirus.
“Our role is to raise money for sport … we’re happy to help with that [so] they can survive this crisis,” he said.
“We want to play our role as we were set up to do to help them survive and grow, as part of Australian life, and that’s what we hope to do.
“We’ll endeavour to do that through this crisis … [because] sport is a huge part of Australian life.”