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Social media mistakes

The same business regulations apply online as in person. False advertising, employment practices liability and confidentiality breaches are some of the problems a business can face.

For instance:

Facebook ad faux pas. If someone goes to buy a product and finds out the offer was not real, you can be sued for false advertising.

This happened to McDonald’s last year. The company posted the cost of its Extra Value Meal, and it turned out to be more expensive than when items were purchased separately.

Prurient posting. While signed in as your company on social media, an employee makes an inappropriate comment to another person who sues the company for sexual harassment.

Illegal oversharing. A customer asks for help online, and in the conversation you explain the situation with her account information. You may have just violated a privacy agreement or regulations such as the Health Insurance Portability and Accountability Act (HIPAA) by making their information public.

Source: Diversified Insurance Service

Having an online presence in social media is part of being in business these days. Social networks such as Twitter and Facebook plus blogs enable businesses to engage with customers and build their brands, but they also leave companies open to potentially expensive legal actions.

For example, what if an employee posts a racist or offensive comment on the company’s Twitter account?

What if a worker uses the company Facebook page to post disparaging comments about a competitor’s products?

Or what if your employees post copyrighted information — such as someone else’s photos — to your company’s blog?

What your business puts online, even if it is a disgruntled ex-employee or novice intern, your company is liable for.

GENERAL LIABILITY GETS LESS PERSONAL

Previously, employers would be covered in case of such lawsuits by their general-liability policy, but that’s not necessarily the case anymore. General liability only broadly protects employers from third-party lawsuits.

“More and more, general liability is shying away from this coverage,” said Robin Fischer, partner, senior vice president at Woodruff-Sawyer & Co. “General liability is used to cover things like slips and falls. But with social media, it’s starting to exclude personal injury. You have to be careful what [coverage] you have.”

CYBER LIABILITY GOES TO THE MEDIA

What businesses can do is acquire media-liability coverage under their cyber liability policy. Cyber policies typically cover things like network security, and business interruptions due to a breach. But, all policies are not alike and continue to evolve, Fischer said. The best thing to do is check with your broker.

“Most general liability policies no longer provide personal injury [libel, slander, etc.] protection and insureds that have social media exposure should purchase a cyber policy that includes media liability coverage,” she said.

COMPANY POLICY SHOULD GET SOCIAL

In the workplace, the best defense for an employer is to promote a social media policy.

“We advise our clients that the best way to minimize their risk is to have a social media policy and to educate their employees,” Fischer said. “The policy should include online security measures, rules concerning how employees share company information, restrictions on personal use of social media while at work and how they interact on social media with employees outside of work.”

GET ADVICE ON YOUR ADVICE

That goes for blogging as well, which is only potentially covered by media insurance.

Blogs generally give advice. If a doctor, for example, gives advice which causes damages, someone will likely be able to sue. The same goes for accountants, financial advisers, insurance agents, fitness professionals or anyone else giving advice because as a professional, wrong advice is considered a negligible act. Even if you are not an expert, when giving advice through your blog you can still be held responsible as one.

“Have someone review it [before posting]. We run it by legal,” Fischer said.

Use of Twitter is even more vulnerable because more employees are using it, and it takes longer to take down a volatile soundbite. There is also the potential for the employee to sue the company claiming free-speech rights, Fischer said.

WHEN SOCIAL GETS ‘NASTY’

In the technology world, it’s not uncommon for lawsuits to arise against businesses over copyright and patent infringement. It’s also not uncommon for subsequent defamation suits over “nasty” postings on websites and social media, said Dennis Cusack, partner at Farella Braun & Martel.

Social media mistakes

The same business regulations apply online as in person. False advertising, employment practices liability and confidentiality breaches are some of the problems a business can face.

For instance:

Facebook ad faux pas. If someone goes to buy a product and finds out the offer was not real, you can be sued for false advertising.

This happened to McDonald’s last year. The company posted the cost of its Extra Value Meal, and it turned out to be more expensive than when items were purchased separately.

Prurient posting. While signed in as your company on social media, an employee makes an inappropriate comment to another person who sues the company for sexual harassment.

Illegal oversharing. A customer asks for help online, and in the conversation you explain the situation with her account information. You may have just violated a privacy agreement or regulations such as the Health Insurance Portability and Accountability Act (HIPAA) by making their information public.

Source: Diversified Insurance Service

With high stakes, these legal disputes get costly.

“I regularly remind employers, ‘What posts counts,’” Cusack said. “Be very careful.”

E&O FOR WEB 2.0

According to the International Risk Management Institute, errors-and-omissions insurance, which can fall under a cyber/media insurance policy, can generally protect businesses who give advice as part of their service to clients and prospects. It’s a type of insurance designed for publishers, broadcasters and other media-related firms.

Though media-liability policies originally only existed for publishers, they are now becoming more prevalent as companies build brands through different media types, businesses can specifically tailor policies to get the exact coverage needed. Generally, they can provide protection for:

Defamation, libel, slander or disparagement. This can help make sure the company isn’t downed by someone offended by its social media presence — such as someone who commented on the site.

Invasion of privacy. This happens most often with photography, especially when the photographer doesn’t get releases for using someone’s image on a commercial page.

Copyright infringement. This helps in case a company accidentally publish something with copyright issues.

When a company or its social media coordinator was not aware that a page, tagline or promotion had already been posted by someone else.

Breach of implied contract, license agreement, or product placement agreement. That’s when the company didn’t perform to the partner company’s standards.

Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.