Social Media and Legal Risks for Businesses

27 Aug

Businesses are taking advantage of Social Media for different reasons: increasing their productivity, marketing, building relationships through interactions with their customers, improving internal communication. However many businesses are not aware of the legal risks that can arise from the use of Social Media by the firm or by their employees.

To illustrate these risks I will talk about a brand that everyone knows: Coca-Cola. Coca-Cola operates in the beverage industry and “strive to refresh the world and inspire moments of optimism and happiness”. They have been serving more than 3500 different beverages to more than 200 countries for 126 years.

  • Confidential information: Coca-Cola’s success is based on secret recipes. Think of how quickly the recipe would spread throughout the world should an employee disclose it on purpose or not on Social Media. Disclosure of such information would definitely put an end to CocaCola’s competitive advantage.
  • Trademark and copyright: Non-authorized use of the company logo or trademark  raises the issue of intellectual property. In the case of Coca-Cola it ended pretty well: 2 of  Coke’s fans decided to set up a Facebook page for there favourite drink and their page ended-up to be the second most popular page on Facebook even if the company marketing team had nothing to do with it. Today, the company decided to only allow for people authorized or associated with the company to make a branded page and asked the 2 creators of the page to take  it over and keep on managing it. Even with this success story we can realize how harmful it could have been for the company if someone less devoted to Coca-Cola had created a brand page with misleading information without the customers knowing if the company actually had any relationship with this page or not.
  • Human resources: With the use of social media you can fear a lack of control on what your employees are doing. What are they saying about the company? Do they use social media for their personal life during working hours? What kind of use of social media could lead to en employee termination? What I understood from Malcolm Burrows (a guest lecturer of my Enterprise 2.0 class) is that defamation or offensive comments made by an employee is a valid reason to dismiss a person. This is true even if it’s from their home computer. I didn’t find any example for Coca-Cola but it should be highlighted that they need to set boundaries of what is or is not an acceptable use of social media. They also need to monitor what they employees are saying because it has become so easy to commit defamation hiding behind a computer screen.

To address these risks Coca-Cola created a Social Media Policy (SMP). This document is set up to provide guidance to their employees so that they know and understand their role in the on-line community. In its SMP Coca-Cola explain to its employees how they are expected to behave (be respectful, act with honesty and integrity, convey the company values…) but they also remind them that they are legally responsible for their action and for any content that they post.

For a Social Media Policy to be effective it should be written clearly, employees should be trained to understand it and above all it should be enforced!

Do you have any other ideas on how to cope with the legal risks associated with social media?

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15 Responses to “Social Media and Legal Risks for Businesses”

  1. brentchapman92 August 27, 2012 at 8:50 PM #

    Hey Aurélie, great post!! Coca Cola’s trade mark recipe is something that definitely would not want to be leaked to the public through any form of communication. How do you believe Coca Cola’s SMP should be communicated through to their employees on a regular basis so no breach is made to their policies? A lot of companies just make each employee read and sign it once and the employees never really see it again.

    • aureliequt August 28, 2012 at 8:49 AM #

      Hi Brent,
      You made a point there saying that creating a Social Media Policy is useless unless it is well communicated to employees.
      As I said in my post employees should be trained to understand the policy. This could be done through classes where employees are taught guidelines, suggested practices and pitfalls of using Social Media. This could be the opportunity for the employee to ask as many questions as they want. This could be done on an annual basis.
      In addition Social Media training should be given to every new employee along with their hire training.
      Eventually, it is important to keep the employees updated on policy changes through the use of memo or special training session if the change is significant or complex.

      Hope it helps! 😉

  2. chunweiin346 August 27, 2012 at 9:27 PM #

    Good post! for Coke brand and I used to hear online social media principles are intended to outline how these values should be demonstrated in the online social media space and to guide your participation in this area, both when you are participating.

  3. Vatsal INB346 2.0 August 28, 2012 at 3:04 PM #

    Hello Aurelie! I have to say, you have done an amazing job in choosing Coca-Cola and researching the risks surrounding it. If Coca-Cola doesn’t make the right use of the social media that it’s involved it, it can be a massive letdown for the company. Especially since their products are so damn popular and important to them. I think that enforcing a social media policy is not enough for any company whether they are big or small, they also need to spend time in training and making sure that their employees understand the risks involved and the consequences of them. I think Coca-Cola’s social media sites like a fan group on Facebook, Twitter and other websites should only be maintained by well trained employees and should not be handed over to every new employee straight away as this can come back in time to haunt Coca-Cola and ruin its reputation. At the same time they need to be careful about the information they post as accidents do happen but if they accidentally leak their recipe for Coca-Cola they will not only lose their position in the soft drink manufacturing line-up but also the competitors will know what to improve in their own drinks. So every business or organization needs to be careful about these risks but at the same time use social media tools to their best capability.

    Feel free to read and comment on my blog at http://vatsalqutinb346.wordpress.com/

    • aureliequt August 30, 2012 at 5:54 PM #

      Hi!
      Thank you for your comment and your analysis of the use of a Social Media Policy. I agree that managing Social Media should not be handed over to anyone. A lot of companies tend to perceive community management as a job they can get done by young interns and overlook the risks of using Social Media.
      Habitat (a furniture maker) bore the brunt of an overenthusiastic intern who decided to use popular topics’ hashtags to advertise for the company products.
      Using #Iran to promote your brand when an international conflict is going on there and that people use the hashtag to discuss this sensitive topic might not have been the brightest idea… And this attempt of wining followers and customers turned into bad press, a flow of negative comments about Habitat and a dismissed intern.
      Conclusion: Good community management requires training and skilled workers.

      Here is a full article about this failure if you want to know more about this story:
      http://econsultancy.com/au/blog/4095-twitter-fail-furniture-maker-habitat-uses-iran-thread-to-boost-sales

  4. EDIE CHENG August 28, 2012 at 6:42 PM #

    Hey 😀
    Even Advertising Standards Bureau of Australia has ruled that Facebook fanpage can be regarded as a marketing communication tool when used by advertisers, thus the advertisers or agency have the obligation of moderating all the user-generated contents on fanpage, I personally think both organisation and customers should be responsible about their action and comments on social media platform, instead of blaming on either side for the loss of control 😀
    I quite enjoy the video and reference. Thx for sharing 😀

    • aureliequt August 31, 2012 at 10:01 AM #

      Hi Edie!
      I agree with you when you say that not only the company but also its customers should be held responsible for their comments.
      Coca-Cola understood this, and dedicated a whole paragraph in their SMP to give guidelines to any non official spokesperson on how to interact in the online community.
      These guidelines consist of 4 principles:
      – Adhere to the Code of Business Conduct
      – Responsibility: Anything you post is your responsibility
      – Help monitoring: Forward any important positive or negative comments to the company
      – Avoid reacting to negative comments: Let professionals deal with it

      By doing so Coca-Cola hopes to educate their customers but also to make them feel trusted to talk about and represent the brand in the online community.
      However this policy seems to be insufficient as proved the failure of a word association game launched on Coke’s fan page that ended in customers insulting each other.
      Here is the link for the whole story:
      http://socialmediainfluence.com/2012/03/02/coca-colas-facebook-word-association-game-backfires-into-fan-on-fan-scrum/

      I’m happy you enjoyed the video 😉

  5. zenghoong August 30, 2012 at 12:02 AM #

    Hey Aurelie, another great post you wrote there. Love how you used Coke as an example. Also, I liked how you mentioned several relevant risks that are specific to Coke. As for how to prevent Legal risks of Social Media, I agree that Social Media Policies are the most common way used to protect a company. Would like to see you could go into more details about the areas of the SMP if you have time. Overall, I enjoyed reading your post and would definitely come back to read more next time. 🙂

    • aureliequt August 31, 2012 at 9:40 AM #

      Hi Zeng!
      If you want to know more about Coca-Cola SMP I published the link on my post but I can tell you that their SMP is based on 5 core values:
      – Transparency: Be Honest
      – Protection of customers’ privacy
      – Respect of Intellectual property
      – Responsibility in the use of Social Media
      – Utilization of best practices

      I hope it helps you have an idea on how Coca-Cola try to transpose the company values to their use of Social Media.

      See you!

  6. charlestontelles August 30, 2012 at 10:28 AM #

    Hi Aurelie.
    I would love to have the secret recipe from Coca-Cola :). Actually coca-cola competitors have been trying to speculate the recipe with ex-employees and they have never succeed. In IT field that happens all the time, there are cases from ex-Microsoft employees forming their own company exploring products they used to work on when they Microsoft employees. After that incident in middle 80’s Microsoft applies restrict policies regarding intellectual capital. In my job for example I am always signing documents about information restriction and intellectual products. Those are the typical documents that we usually sign but only pay attention when something wrong happens 🙂

    Charles (http://charlestontelles.wordpress.com/)

    • aureliequt August 30, 2012 at 11:05 PM #

      And I would LOVE to have the secret recipe from Nutella ^^.

      I’ve also heard that a company could protect its intellectual property through the use of softwares. These softwares can prevent employees from copying information on a USB device, block information contained in a laptop if it were to be lost or stolen or scan outgoing e-mail for keywords suggesting that secret information is being shared.

      This of course should be implemented at the same time as employees are educated on how to behave.

  7. adithyashartawansoeharto August 30, 2012 at 6:22 PM #

    Hey aurelie,

    awesome Coca Cola case to write about. Your blog have helped me finish my blog assignment for this week.

    Feel free to comment on my blog
    http://adithyashartawansoeharto.wordpress.com

    Thanks,
    Adithyas Hartawan S

    • aureliequt August 30, 2012 at 10:36 PM #

      Hey!
      I’m really happy that my post helped you writing yours 😀
      I’ll have a look at your blog.
      See you around.

  8. shaungoossens August 31, 2012 at 4:24 PM #

    Hi Aurelie,
    Another great post and researched very well.
    Also very insightful reply on the company Habitat on the risk of using someone without training!

    – Shaun

  9. PrapatW September 1, 2012 at 3:19 PM #

    Coca-Cola was lucky about their Facebook fan page. Coca-Cola also did a good job to become a part of the Facebook page. The social medias policy also help Coca-Cola to reduce risks that come from social medias. The use of trademark in social medias is a big issue. If Coca-Cola fan page is about negative feedback that their fan get from Coca-Cola, that page will both destroy Coca-Cola reputation and also hurt the fan who created too. We really have to be careful when using social medias as not every case will end well.

    Cheers,

    Prapat W.

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