It's great to be able to reach people in real time, but you'd better think twice, or thrice, before hitting the "post to the web." How and when companies face risks by "goin' live" on Facebook.
By JOEL BERG, a freelance journalist and college professor
Scenario: After starting a Facebook page for your company, you turned over daily management to employees you trusted.
But the false sense of privacy that trips up teenagers also seduced your employees.Instead of pictures from last night's beer bash, however, your new "whiz kids" posted a video they found on some website. Your employees thought they were being avant-garde, linking the page to videos and graphics-heavy websites.
But the video came as a nasty surprise. After all, you'd spent hours recruiting technology-savvy, 20-somethings from renowned colleges to help you, and you'd paid them a pretty penny.
But now you're staring at a stern letter from the video's copyright holder; your first warning something was amiss. A closer look at the site rang even more alarms: Employees spilling proprietary information and sparring angrily with your company's new "friends."
This wasn't the kind of social media your company had signed up for. In fact, when your legal department confronted your whiz kids with issues related to copyright infringement, they stared blankly. "Never heard of the expression," one of them said.
Companies are drawn to online social media because it can help them forge closer connections to customers new and old. In your case, social media has done exactly that.
Your company generated 40,000 new leads in the 12 months since the Facebook page went live. The caliber of only applicants for open positions exceeded all expectations. You thought there's no limit to the power of social media.
You were right, perhaps not quite in the way you'd expected.
Then it dawned on you: If companies and their employees are careless, the connections can give way to claims of defamation, invasion of privacy and copyright infringement.
You're a sales and distribution channel. Your first love is to prospect, to qualify and then to close the deal. Since when did you ever imagine you'd be in the publishing business dealing with copyright infringement issues?
You're not a publishing channel ? or are you? They are risks faced by publishers every day, and they are now shared by any company that logs on to Facebook, Twitter and other social media sites, according to insurance executives.
If only you'd known before "goin' live" with that Facebook page. You'd all experienced the upside. Now you've learned a lesson. Welcome to the downside of social media.
Analysis: "Everyone is effectively a publisher now that uses these tools," said Ken Goldstein, worldwide media liability manager for Chubb Group of Insurance Cos. in Warren, N.J.
But unlike publishers, most companies lack sufficient controls to mitigate the risks, Goldstein said, citing a survey finding that two thirds of companies don't have a policy on social media use. "That's a scary type of approach to take with regard to such powerful tools, and the fact that they can go viral," Goldstein said.
An ill-considered post, tweet or comment can do lasting damage, even if it doesn't lead to a lawsuit, Goldstein said.
At the very least, companies should consider who is allowed to post--do they have thick skin?--and whether anyone should be looking over their shoulder as they type.
"It's great to be able to touch people in real time, and quite frankly that's the benefit of social media," Goldstein said.
But sometimes, it might be better to take a few minutes and have content reviewed before it hits the web, he said. Depending on the situation, companies might even decide to refrain from hitting "reply" at all.
In a worst-case scenario, general liability policies may provide scant protection, insurers said.
The policies offer some shield against claims based on advertising, but those protections have narrowed over the years, particularly in the area of intellectual property violations, said Jim Borelli, media liability practice leader for Chicago-based insurer CNA.
Advertising liability policies can fill the gap, Borelli said. But it is unclear how those policies will apply to online content, such as a company blog. Not everything broadcast on social media is a commercial.
Employees, for example, could post embarrassing information about colleagues. The resulting claims, involving defamation or invasion of privacy, might fall outside existing coverage.
"General liability policies aren't designed to cover media liability risks," Borelli said. "So I think that's where a gap could occur."
Media liability coverage can fill the gap, Borelli said. But, he added, there are questions about how deeply a policy would extend over social media without an endorsement.
D&O policies also might be porous, said Loretta Worters, a spokeswoman for the Insurance Information Institute in New York. The policies may include coverage for defamation, but if losses mount from claims involving social media, insurers might start excluding them. Twitter already has given rise to several defamation suits, said Kirstin Simonson, an underwriting director at Travelers who oversees strategy for social media.
In a case that was eventually settled for a reported $430,000, a fashion designer sued punk-rock singer Courtney Love. Reality TV star Kim Kardashian also was embroiled in a lawsuit after she tweeted negatively about a diet that had been using her name, allegedly without her permission.
For companies, disparagement can be as subtle as having employees tout their company as the only provider of a given product, Simonson said. The statement could be construed as disparagement of any other company that provides the same product, even if those companies are not named.
"That's a very typical thing that you can see as far as the risk on your website, on the blog, if you are allowing employees to do that," Simonson said.
A company also could get into trouble if employees are drawn into a heated Twitter exchange with a customer or vendor and make comments they would not have made in a face-to-face encounter, or even over the phone, Simonson said.
The law, Simonson said, has not kept up with the litigation. "So even if you think you fully understand any safe harbors that you have that might exist, they might be struck down in a given situation," she said.
Simonson advises companies to start by discussing their potential exposures internally and talking about coverage expectations with their brokers and insurers. Companies might find that their existing liability policies need reinforcement.
"There's a potential minefield you have to work around to really understand what is and is not going to be covered based on what it is you're doing," she said.
Companies also should consider potential expenses related to public relations and crisis management if they need to counter negative publicity, she said.
Internally, companies can devise policies to address the risks and start educating employees so they understand the impact their actions might have.
It's not enough to have employees read and sign a copy of the policy, Simonson said. "How many times have we read something and signed it and it's put in a drawer and not acted on?"
In addition to policies, companies need a plan for when something goes awry, Simonson said. "It's like any other business continuity or disaster recovery plan," she said. "When you have that intellectual property violation or an employee who is engaging in a manner that is detrimental to the business, who is the team and what are they going to do?"
Ideally, she said, the team would include both legal and public relations experts who can rush into action, whether to squelch rumors or reassure nervous stockholders.
"I've seen a lot of instances from a data-breach perspective where the companies who are not prepared spend more money and time and effort trying to mitigate the issue than those who have an active plan in place, who know who to call and how to reach them quickly," Simonson said.
The final piece of risk management is understanding the regulatory environment of a company's industry, Simonson said. Medical-device companies, for instance, are under scrutiny for how they tap social media to discuss products.
"It makes for a very complex puzzle," she said. "All of these challenges existed before social media. The challenge now is that the message moves faster to more people."
(Read about our ninth emerging risk, aging workers.)
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