Practical Ecommerce

Social Media: 5 Legal Risks to Your Company

Social media has become not just a place to share our personal lives. Many people use social media to promote their business, communicate with customers, and recruit or check-up on employees. However, most businesses don’t think about the legal risks and issues that may result from such use. The following are five legal risks that you should consider when you or your employees are using social media to promote your business.

5 Legal Risks that Affect Your Company

  1. Intellectual property. You should be careful about using content created by others. Although you may comment on content, there is risk when using content created by others to promote your business without their permission. In addition, using another person’s likeness (i.e. picture) without permission can violate a person’s right of publicity or right of privacy. This may seem basic, but the speed at which posts occur on Twitter, Facebook, and other platforms can result in not fully analyzing the use before it’s posted. For example, if a customer posts a positive review on Facebook or Twitter and you copy that post to your website to use as a testimonial for your product, you run the risk that the customer’s right of privacy has been violated. You should seek permission from that customer to avoid possible legal liability for using their name, likeness, and content. On websites and blogs, you can subject the users to your terms and conditions, which should include provisions to grant you the right to use any content posted to your website or blog for promotional purposes.

  2. Advertising and reviews. Whatever the platform, you should be careful when describing your products or services to make sure that the descriptions are truthful. Any false or misleading statements about your products or services can create liability. Opinions are acceptable — such as, “this is the best sink on the market” — but claims about features or other specifics should be carefully reviewed. In addition, you may be sued for false advertising or unfair competition if you pay for reviews, provide a product for free in exchange for a review, or there is some other relationship between the reviewer and the company, and you do not disclose that information. If there is any relationship to the company by someone speaking publically about your business in social media or on your website, that relationship should be clearly stated.

  3. Defamation. In addition to speaking truthfully about your product or service, you must speak truthfully about your competitor’s products or services. Any false claims that could harm the reputation of your competitor or one of their employees may result in a claim for defamation. Care should be taken when comparing your product to your competitors to assure that all claims, advantages, disadvantages, or other information stated about the competitor’s product is accurate. In addition, you should keep any evidence relating to the claims you made just in case you need to defend a claim for defamation.

  4. Terms and conditions of social media sites. You should be aware that Facebook, Twitter, and others have their own terms and conditions that must be followed, particularly as they relate to advertising on their platforms. You should make sure that you follow those requirements to avoid your advertisements or your entire account being removed from their platform and potential legal liability for your actions. Social media sites can be a great way to stay in front of your customers at a low cost, so losing the privilege of using it can be a major blow to your company’s promotional plans.

  5. Ownership of accounts. Recently there have been a couple of cases dealing with who actually owns the rights to a social media account. If the company has control over access and requires the employees to post on their Twitter or Facebook account, should the company have some ownership interest in the account? Wouldn’t the company like to have access to those followers and control of what content comes from that account after the employee leaves? The courts have not yet made a decision on what criteria would give rise to an ownership interest by an employer of a social media account, but you should be aware of this issue and try to take steps to protect your interests. If you would like to control an account that is set-up purely for business or that your employees set-up for promoting your business, your employee handbook or Internet policy should include terms that transfer rights to the company or terms that protect against disparagement through such accounts during employment and after the employee leaves.

Summary

Using social media for promotional purposes for your business can be very beneficial to your brand, but it can also lead to legal liabilities if a systematic approach is not applied. You should devise a plan with the above legal risks in mind and discuss these issues with your employees and partners to assure that everyone is aware of what is acceptable. In some cases it may slow down the speed at which promotions are created and executed through social media, but it will help to protect the business against making a costly mistake that causes both legal liability and reputation problems throughout your social network.

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Jeff Jacobson, Jd, Llm
Jeff Jacobson, Jd, Llm
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Comment ( 1 )

  1. Rick Wang August 30, 2012 Reply

    I think social media policy is very significant. If corporation would like using content created by others, they need to get owner permission first. This is basic courtesy and right of privacy.

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