Social media policies critical for reducing legal, business risks

Beyond laws and rules, your company's reputation can take a severe hit through indiscreet or careless use of social media.

* Jennifer Leggio is on vacation

Guest editorial by Jonathan I. Ezor

The business press is filled with discussions of social media, from blogs to Facebook and LinkedIn to Twitter, and how they can move your company ahead. While there are tremendous benefits to social media, there are some risks as well, both legal and otherwise. The risks are all manageable, but only if you recognize and address them ahead of time.

First, consider what specific laws and rules apply to your company. Investment firms, for example, must log every communication with clients. It's hard enough to do that with IMs; how do you save every tweet that comes from a customer? The Twitter Web site does not offer logging; if you're going to enable Twitter in your brokerage, you had better find (or develop) a Twitter client that does.

Another rule for many industries is confidentiality. It's true for medical professionals, attorneys, financial advisors, and anyone with a non-disclosure agreement. Unfortunately, it's too easy to reveal confidential information, either directly or otherwise, through social media. If, say, a sales rep posts to Facebook that he's looking for a good restaurant in Bentonville, Arkansas, it's fairly obvious that he's having discussions with Walmart (the major retailer headquartered there), whether or not Walmart (or the rep's boss) wants that visit publicized.  The company may currently have an exclusive with another retailer, and may be investigating jumping over to Walmart. That discrete investigation goes out the window with that otherwise innocuous tweet.

Don't forget about other rules and laws that apply to your firm. If you fill your Facebook page with images and videos to which you don't have copyright, that can lead to lawsuits or takedown notices. If one of your workers creates a fake identity to boost your product or criticize a competitor's offering, consumer protection agencies may take notice. Negative tweets about potential hires can be used as evidence in a discrimination action, and anything you or your colleagues post online may be introduced in a courtroom.

Beyond laws and rules, your company's reputation can take a severe hit through indiscreet or careless use of social media. That doesn't just mean embarrassing errors, although those can certainly take their toll. It can be just as bad or worse when, for example, your company promises to be responsive to customers via its social media portals, and fails. Not only does this indicate lack of care, but it's a setting where those now disgruntled customers can tell millions of fellow customers (or worse, potential customers) how badly your company has treated them. Picture a Facebook wall filled with negative feedback from your customers, and you begin to see the pitfalls.

In order for your business to get the most benefit out of social media platforms while minimizing these and other risks, you need to create and enforce a comprehensive social media policy. Your policy should be based on your goals with social media, take into account any special laws or rules, and identify people or positions who will be the public face of the firm online. You should decide whether and how other employees may identify themselves with the business when tweeting or blogging, and if you permit them to, give them guidelines on how (and how not) to do so. Training on how to use various social media tools is key, as is an ongoing search for mentions of your business (by its employees and others) across the Internet. Make sure to involve your company's risk managers (insurance brokers, attorneys, accountants, etc.) in your planning. Above all, be proactive in learning about these resources and how best to use them, and you'll be much more likely to see profit rather than pain from social media.

Jonathan I. Ezor is a law professor at Touro Law Center and director of its Institute for Business, Law and Technology, and is counsel to The Lustigman Firm on issues of privacy, e-commerce and affiliate programs. He can be reached at


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