Tag Archives: Legal risks

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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