The 7 Biggest Legal Risks to Your Company When Using Social Media

How to Avoid Draconian Rules and Keep the FTC Off Your Back at the Same Time

by Brian Heidelberger
Published: September 15, 2009

Brian Heidelberger

As an advertising lawyer, I know that times are tight and marketing budgets have been slashed. (Heck, I've had to go from triple-billing my clients to only double-billing them.) So, in the hopes of single-handedly lifting our nation out of this recession, I am providing my own mini stimulus package: a list of the seven biggest risks to your company when using social media.

1. Employees
So your CMO likes to keep his "followers" in the loop about the company's latest product introductions. Or your newest assistant-assistant account executive likes to gossip to her "friends" about the love lives of her co-workers. Bad news, dude. Your company may be liable for these "personal" social-networking messages, regardless of whether you even knew your employee was posting them.

2. Mothers
Yes, I said it. Mothers are a huge social-media risk. Listen, I have nothing against mothers. Even a lawyer like me loves his mother. (Hi Mom!) But your idea to send moms free stuff in the hopes that they will blog about it has legal implications. So, before you ship out a pallet of your latest soy-acacia-berry juice box, realize that the FTC requires that you make sure that moms disclose the free swag in their reviews.

3. Creativity
You're right, your product will probably sell better if you make up fake reviews and post them on fake blogs. But for some crazy reason the New York attorney general takes issue with this million-dollar idea, and he has brought two false-advertising claims in the past several months against advertisers for this practice -- one for $765,000 and the other for $300,000.

Even if the New York attorney general doesn't catch your fake blog, internet geeks probably will. Remember, your kids are much cleverer than you are and spend way too much time on the internet due to your poor parenting skills. They will figure out that your blog is fake, and they will embarrass you and your company. Just ask the advertiser and its agency that created the fake blog "All I Want For Christmas," purportedly written by two tweens on a quest to convince their parents to buy them the latest video-game player. In no time, internet geeks found out that the website was actually owned by the advertiser's agency, and the online torture of the two companies began. They don't call it "flogging" for nothing.

4. Enthusiasm
I know, your product is great, and if the world just knew it too, you'd be a millionaire. But try to resist the temptation to go out and pepper message boards with anonymous praise for your products. First off, it's pretty obvious when there are only three reviews for your product on Amazon and they each end with five exclamation points. Second, the FTC has recently indicated that it is illegal for an employee to endorse its own company's product on a message board without the employee disclosing that she works for the company.

5. Bureaucracy
Eighty-seven percent of companies still do not have a social-media policy. Why so many? Well, some don't realize they need one. Other companies' policies are still stuck in committee. My advice is to get on the ball and put one together ASAP. I know, this probably means that you will have to interact with both your advertising lawyer and your labor lawyer on the same day. But trust me, right now your employees are Linking In, Friending and Twittering without any regard for the fact that they may be putting your company at risk. Get some control over these people, pronto.

6. Your Draconian rules
So yours is one of the few companies that actually got it together and developed a social-media policy. Good for you. But please tell me that you resisted the temptation to ban your employees from doing everything under the sun. My advice? Be realistic and try to protect your company without forming rules that you know your employees can't and won't comply with. Take heed from the Associated Press, which created a firestorm among its own employees when this bastion of the First Amendment took the oppressive stand that its own employees could never mention the company when using social media. Or learn from the Southeast Conference (SEC), which had to turn a 180 just a week after announcing its ridiculously broad policy that fans can't Twitter during football games.

7. E-mail
Advertiser's Standard Playbook, Idea #675: Distribute free samples of your new product to your advertising agency's employees and ask them to send e-mails or direct social-networking messages to their friends sharing this once-in-a-lifetime experience. Hold on marketing maven! Your employees' e-mails and their social-networking messages may very well be subject to the federal law regarding sending unsolicited commercial e-mail (CAN SPAM), which will require both the e-mail and the social-networking messages to include certain disclosures (like the company's physical postal address, an "advertisement" label and a way to opt-out from receiving future commercial messages), and may require you to check the friend's e-mail or social-networking address against your current opt-out list.