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Legal Pitfalls of Social Media Marketing

It’s a truism that the law lurches awkwardly along behind technology. Nowhere is this more obvious than in the case of social media marketing strategies. Even if the financial benefits are hard to quantify, the advertising potential of the viral tweet/selfie/video featuring your product is just too good to pass up, especially given the relatively small initial financial investment this may take. The problem is the potential for legal liability. Talk to your marketing gurus about maximizing the good. Talk to your business attorney about minimizing the potential harm from site ownership disputes, deceptive advertising claims and intellectual property and privacy infringement.

Social Media Marketing Site Ownership Disputes

If you have an employee who maintains a social media account used to promote your company, who owns the account when the employee leaves? Imagine what could happen if the departure was less than friendly. It would be better to be clear at the outset. What if you are paying independent contractors to mention your product on personal blogs — the infamous “Moms can make money from home by blogging” schemes. We can see how this might go wrong. One of the benefits of social media marketing is that it allows the customer to interact with the brand. That is also true of detractors. You can never completely control negative feedback, but if you own the site, you can monitor it more quickly, and you can take it down if necessary, which is far more valuable than a defamation or disparagement suit.

False Advertising

Section five of the Federal Trade Commission Act outlaws “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.” Some states, such as California, have enacted even more aggressive legislation aimed at prohibiting false advertising. While the FTC Act and much state legislation are designed to protect the consumer, the Lanham Act protects competitors. These rules apply even in the world of consumer-to-consumer advertising, but how is not always entirely clear. As a start, the FTC has issued voluntary Guidelines Concerning the Use of Endorsements and Testimonials in Advertising, which outline rules about deceptive claims, including sponsored claims made by third parties. Keep two large ideas in mind.  If an avid fan of your product makes a deceptive claim about it, and your company in any way facilitates the dissemination of that claim, you too could be liable. You must also disclose the true identity or corporate affiliation of a person touting the firm’s products or services via social media.

Intellectual Property and Privacy Violations

Social media sites like Pinterest that encourage users to post pictures and public bookmarks are also a source of trademark and intellectual property law violations. Companies must make sure that they own the rights to all the images they post on social media sites. Even the use of non-trademarked images may require the permission of the person depicted.

The legal principles at work here are not new, but applying them in the context of consumer generated marketing can be tricky. The best approaches involve careful monitoring and the development of clear guidelines for social media marketing campaigns.

Nasir Pasha, Esq.

Post by:

Managing attorney and co-host of podcast Legally Sound | Smart Business

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