Five Legal Risks of Social Media for New York and New Jersey Small Businesses

Colearn Social MediaSocial media is no longer an optional feature for most businesses. Consumers expect to find businesses online, not only on a company website, but also on popular social media platforms like Facebook and Twitter. Many businesses use these platforms to market products or services, but some use them simply to engage with their customers. These forms of media offer varying degrees of benefits and opportunities for different types of businesses, but all companies using social media face certain potential legal risks and liabilities. As small business lawyers for New York and New Jersey, we have seen how social media can get companies into trouble, but we have some suggestions for what to do.

1. False or misleading advertising: Advertisements put forth through social media must adhere to the same rules as any other kind of advertising. New York and New Jersey’s consumer protection laws prohibit businesses from making false or misleading statements to consumers about their products or services, and the penalties can be quite harsh.

2. False or defamatory statements: Social media, particularly Twitter, lends itself to short, quick bursts of information, often without the thought and consideration that might go into a longer marketing piece. Statements about a competitor or any other person or business, even limited to 140 characters, could expose a business to liability for defamation. Several recent lawsuits, including one against musician Courtney Love, indicate that Twitter is a viable medium for defamatory speech.

3. Bad publicity: Social media, perhaps for the first time in history, offers a two-way street between companies and consumers. A disgruntled customer can cause havoc for a company’s reputation through social media. A company’s response can make the difference between allowing the dust to settle and causing the dispute to “go viral,” giving it far greater exposure than it might have otherwise had (often known as the “Streisand Effect.”)

4. Disclosure of conflicts of interest: Guidelines from the Federal Trade Commission (FTC) require disclosure of any “important connection” between an advertiser and an endorser. This could apply to any post to the internet that endorses a product or service, or even speaks favorably about a business, if the author is an employee of the company.

5. Employment laws: Employers must take care when reviewing a job applicant’s social media information. If they come across information that they cannot legally request from an applicant, they could become liable under anti-discrimination laws if they do not hire that person.

The solution: Oversight and accountability. Employers can take advantage of the opportunities of social media while mitigating their risks, if they conduct effective oversight of social media activities and hold employees accountable. Written policies on social media use are critical, including policies on employees’ personal social media posts that relate to the company. A company should have one officer or employee with responsibility for social media, and that person should have a procedure to vet blog posts, tweets, and other postings. Companies may not be able to control employees’ use of social media now that so many people have smartphones, but they can strictly control access to the company’s social media accounts. Finally, the company should have clearly-stated consequences for employees who violate the social media policies.

The New York business attorneys at Samuel C. Berger, PC offer fixed-fee packages of legal services to businesses and entrepreneurs who want to do business in New York and northern New Jersey. To speak to a member of our skilled legal team, contact us today online or at (212) 380-8117.

More Blog Posts:

Marketing, Technology, and Truthfulness for the New York and New Jersey Small Business, New York & New Jersey Business Lawyer Blog, April 12, 2012
Businesses in New York, New Jersey and Elsewhere Are Warned About Seeking Access to Employees’ and Applicants’ Social Media Passwords, New York & New Jersey Business Lawyer Blog, March 30, 2012
Trends from 2011 for New Jersey Businesses, New York & New Jersey Business Lawyer Blog, January 5, 2012
Photo credit: ‘Colearn Social Media’ by Colearn (Own work) [CC-BY-SA-3.0], via Wikimedia Commons.