Using social media in your business can present some risks. Before marketing your business on social media, it is important to be aware of the potential risks involved. Whether you like it or not, Social Media presents risks for a business. In this article, we hope to point out some of the benefits and risks of using social media in your business. Make sure to contact a business lawyer to get additional insight as to how you can avoid risks of social media in your business. In this article, we address 5 risks of social media in business.

Neglecting these concerns can result in misleading advertising or even potential liability and lawsuits for your business.
The character limitations of social media (think Twitter) and the informal language often used on such platforms can lead to a literal “hotbed” of miscommunication and erroneous advertising for your company.

Other unintended material misstatements or omissions might occur simply due to other aspects of social media that inhibit communication and the types of material we can present to viewers.

Social Media Advertising and Endorsements

It is important to be aware that any online posts or reviews about your company can potentially be misconstrued as endorsements.

The Federal Trade Commission (FTC) imposes strict regulations on product endorsements and online advertising. For example, per FTC regulations — all online advertising must tell the truth, not be misleading to customers, and all advertising claims must be substantiated.

Therefore, as a business owner, it is imperative to continually monitor what people are saying about you online, and be ready to respond to any potential threats that could put your business in jeopardy.

For more information on the FTC’s rules regarding online advertising, see the FTC publication: Advertising and Marketing on the Internet: Rules of the Road.

Client Testimonials

Just because a client shares positive feedback about your company doesn’t mean you can reproduce it without their permission.

If you want to share comments, a rating, or any other feedback provided by a customer, you must get written consent before including it in your advertising.

Intellectual Property, Copyright, and Trademark

Posting content owned or controlled by someone other than your business may violate someone else’s intellectual property , copyright, trademark rights, or a site’s terms of use .

For instance, Facebook’s business advertising policies state that advertising must not contain any content which “infringes upon or violates the rights of any third party, including copyright, trademark, publicity, or other personal or proprietary rights, and that such a violation constitutes third-party infringement.’’

Furthermore, if your company advertising makes any direct references to products or services offered by another company, this is known as branded content, and you must obtain special permission in order to use another company’s name in your advertising.

Intellectual Property

It’s important that your company’s advertising doesn’t violate or obstruct someone else’s intellectual property rights. “Intellectual property” (IP) generally refers to laws concerning patents, copyrights, trademarks, and trade secrets.

To protect your business when marketing through social media, you should know:

● the types of IP protected by law
● any exemptions that may allow you to share certain content
● the potential cost of violating IP laws, and
● how you can get permission to use content

Despite your intentions, you may face stiff penalties if you are found guilty of violating IP laws on social media. A plaintiff in an IP infringement case can ask the court for monetary damages or even an injunction.

An injunction may simply require you to stop the infringing activity, but in some cases it may also result in your business having to turn over its website domain, social media account, or even shut down your entire online operation.

Copyright

Copyright creates legal protection for “original works of authorship fixed in a tangible medium of expression.”

Copyright ownership grants the owner exclusive rights to do the following:

● reproduce the copyrighted work
● create derivative works based on the copyrighted work
● distribute, sell, or transfer ownership of copyrighted work to the public, and
● to perform the copyrighted work publicly

Social media sites freely allow users to post content including photos, videos, and other digital files, which inevitably results in the illegal distribution of copyrighted material.

All of the following are examples of potential copyright infringement:

● copying and pasting excerpts of content to “fill space” or simply restating something someone has already written
● playing music files in the background of videos
● copying and pasting images into your posts, or
● copying web design code to use on your own site

If you did not create the content you are sharing on social media, copyright laws likely prohibit you from using it without the owner’s consent.

Trademark

A trademark is a word, phrase, symbol or design that identifies and distinguishes the source of goods from one party to another.

There are two key elements to that definition:

● trademarks that protect commercial products and services, and
● trademarks which identify the source of goods and services.

Therefore, either your trademark must be inherently distinctive — meaning it identifies your company as the source of a product — or your trademark must have acquired distinctiveness, meaning that the public identifies your trademark with your particular good or service, and that you are the source of the product.

Trademark laws protect trademark owners from two types of infringement, including, likelihood of confusion or dilution.

To avoid infringing on the trademark rights of others, you must avoid using trademarks in any manner that could cause consumer confusion about the source of goods or services (likelihood of confusion) or “dilute” or weaken, another company’s brand.

Publicity

A person can sue your business for misappropriation of likeness if you use a photograph of someone for commercial use without their consent.

Commercial use is when a name or image is used to sell or endorse a product or service. If you don’t have written consent in the form of a release to use someone’s name or image, you could be sued for a violation of privacy.

In addition to a potential copyright claim over the use of a photo, there is a danger with using a celebrity or well-known person’s photo. These people could raise a right of publicity claim. Right of publicity is the right to use one’s name, likeness or identity for a commercial purpose.

As a rule of thumb, do not use the image, name, likeness or even quotes from a celebrity to promote your business on social media.

Even if you have permission to use a photo, the photo also must be used in the context in which the person believed it would be used.

Furthermore, if an ad conveys something deceptive or negative that offends or embarrasses the person, you could be sued for portraying him or her in a false light.

Privacy

If your business uses an online platform for advertising, you need to be mindful of how you share information that includes any reference to a customer, client, or employee.

Simply resharing an item on your site that a client, customer, or employee has put online without their permission could be considered a breach of privacy.

Your clients and others who interact with your business online have certain expectations of privacy, and it’s important to be aware of the rules for sharing client information, or risk being faced with a potential lawsuit for breach of privacy.

If your company reaches an endorsement deal with a celebrity, social-media influencer, or other well-known individual, that relationship needs to be disclosed. The FTC has pursued cases against companies who do not fully disclose their relationship with social media influencers who promote their products.

Proprietary Information

Disclosure of your company’s confidential or proprietary information can lead to no longer protecting the confidentiality or proprietary nature of that information.

The whole objective behind making information confidential and proprietary is that it requires legal protection.

You disseminating that, or making that information public on social media, could chip away at the confidentiality and integrity of that information.

For all of these reasons, it is also critical to your operation to have a comprehensive employee social media policy. For more about writing a sound employee social media policy, see my blog post How to Write a Social Media Policy for Your Company (future blog coming soon).

While advertising on social media is a great way to reach to reach your customers, social media law is complex and ever-changing. Your best option is to consult with an experienced business law attorney who can help you protect your online business.

Questions about how to form and operate a successful online business? Our experienced business lawyers at the Contiguglia Law Firm, P.C. can help you maximize your company’s potential while minimizing your risk. Call 303-780-7333 for a free 30-minute consultation or schedule an appointment.

For more about how social media can affect your business and other topics to help you gain an advantage over your competition, check out our Legal Lessons in Business.

Reach out to us today for more information on how we can help put your mind at ease and prevent problems with your new business.

Want to learn about running your small business? Check out these blogs!

How to know if your small business needs a lawyer

How to Avoid Litigation as a Startup – 11 Tips

10 Legal and Practical Tips to Start your Successful Online Business