Social Media and Business

Businesses must be careful when engaging with customers using social media. Such utterances amount to an advertisement. They are held to a different standard than just simply another tool to engage in customer relations.

Social media is no different than any other communication channel with the public. If someone posts something as a Tweet or on Facebook, it is treated no differently than if it were circulating a marketing brochure.

A recent case involved that well known brand, Seafolly swimwear. In that case, a designer accused Seafolly of copying her designs. She placed the photos of a number of her designs, next to the photos of a similar Seafolly products on her Facebook page and made a number of comments about Seafolly ‘ripping-off “ of her designs and the way she allegedly that occurred. She was sued by Seafolly for amongst other things misleading and deceptive conduct and lost. The designer was ordered to pay $25,000.00 plus costs to Seafolly.

This case highlights the problem of using social media to make comments a person would not ordinarily include in a media release, brochure or on a billboard. The designer regarded the comments as private comments to her friends, but it was not regarded as such by the Court. It demonstrates not only that you cannot engage in misleading or deceptive comment, but how some, comments will invite trouble if a business does not have the same structures and review process for social media that they do for traditional advertising.  The speed of social media also does not assist, as it can lead to hasty decisions, in situations where the author would not have made that decision, if they had more time to consider their message.

The Advertising Standards Board has also stated that Facebook pages and other social media channels are now advertising and not just comment. Therefore, any business in placing material on social media must comply with the advertising standards and codes. This means complying with rules that require the material to be true and correct, but ensuring that comment is not sexist, racist, or obscene.

As businesses grow, so do the risks associated with social media. Businesses must ensure that material is not released to the social media without proper process. The recent case of Whitehaven Coal Limited demonstrates the serious and extreme consequences that that can affect a business through social media. In that case, the shares in the company went down 6% when a false media release was posted, saying that the company had defaulted on its loans. Although the company released a statement that the initial release was a hoax and the company’s share price recovered, it caused damage to the reputation of the company, and to the shareholders who sold their shares due to the false media release.

Businesses must develop internal policies that educate its employees to make them aware of the powerful impact that social media may have on their employer’s business and be careful about flippant comments made to friends or others about their employer through social media. Staff should be trained to use their good judgment to avoid mistakes.

There should be processes to ensuring that there are opportunities to amend statements before they are sent in the event they breach advertising codes or are defamatory. Finally, businesses should monitor and moderate social media platforms to ensure that third party comments which could offend or breach legal obligations are deleted or amended.