Social Media: The Implications for Business

Social media is a growing phenomenon. It is estimated that, if Facebook were a country, it would have the fourth largest population in the world, so it is no surprise that businesses are exploring how they can use social media as part of their marketing activity. In most cases it is free to use and has the potential to reach large numbers of potential clients or customers and engage directly with them. However, businesses should bear in mind the potential legal risks of using social media and ensure that procedures are in place to address these.

Social media is increasingly being used as evidence in court proceedings; just a few weeks ago, social media was allowed into the courts when journalists were given permission to "tweet" from the court. We are also now seeing the first actions in relation to social media sites making their way through the courts. After a recent hearing at Cardiff's High Court, a local councillor in South Wales settled a case against him in defamation. The councillor had incorrectly stated in a tweet on polling day in June 2009 that another councillor had been removed from the polling station by police. The case has recently settled with the defendant agreeing to pay damages of £3,000 and a reported £50,000 in respect of the Claimant's legal costs. This case highlights the fact that even a 140 character tweet is capable of causing damage and it should be remembered that the usual defamation laws still apply in the online world.

Implementing a social media policy

The ability to post an item so quickly on a social media site, combined with its 'viral' effect, means that millions can become aware of a development in hours. However, this also means that it is hugely difficult to retract any statement and correct any damage caused by the hasty actions of an employee. It is therefore essential to have stringent procedures in place for any postings made by employees. Businesses should ensure that they implement a social media policy that provides staff with guidelines on the responsible use of social media, such as protecting confidential business information, respecting copyright and being careful not to post defamatory or insulting information about others.

Using social media

The nature of social media and the two-way conversation it generates means that both positive and negative comments can be published about a business. Reaction to negative comments appearing on social media sites should be swift and preferably be conducted by a team with legal background knowledge. The experiences of the South Wales Councillors highlight the severe costs that social media can have to business if it is not used with care. The most prudent stance is to establish a monitoring programme within your business, whether you are actively using social media or not, as people may still be talking about your organisation online even if you are not using social media for marketing. This should include details of the specific sites and the types of activity that should be monitored; this will be dependent on the type of business you operate. As well as ensuring that you are able to deal with potential problems quickly, this will also be a useful exercise for tracking any positive coverage you may be receiving.
 
If your business is actively posting on social media sites, it is essential that the individual given this responsibility has a good understanding of the potential legal ramifications of their activity. They should be aware of potential claims as a result of defamatory statements and understand that even the quick and simple copying and pasting of information from one site to another can constitute copyright infringement. It is therefore important to include guidance within your social media policy and provide some form of training to employees using social media.

Whilst social networking is without doubt a fantastic opportunity, the risks need to be taken into account for each business. It may be more of a risk for a firm dealing in high levels of sensitive information to engage in social media marketing than for a small local company selling goods. Being aware of the potential risks and thinking about how to deal with these allows businesses to take advantages of the benefits of social media while taking measures to protect their reputation, privacy and resources.

For further information on implementing a social media policy for your business, please contact Tim Richards, a Partner in our Commercial Team, at tim.richards@michelmores.com or on 01392 688688.