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Social Media Marketing can Create Legal Traps for Businesses

If you’re using social media to market your business, that’s terrific – but you should be aware that the same legal rules that apply in the “real world” also apply to Twitter, Facebook, Pinterest and other venues.

Many companies have rushed into social media marketing plans without considering the legal issues. Here’s a quick look at some of the problems that can result:

Improper endorsements. Many social media campaigns solicit endorsements, testimonials and favorable reviews from consumers, and then promote them. That’s fine – but keep in mind that if you offer anything in return for such endorsements, you may have to disclose this fact.

Generally, you have to disclose compensation for an endorsement whenever (1) it’s not obvious that the person is getting paid, and (2) it could affect the endorsement’s credibility.

That can be a tough line to draw. If you send a single copy of a book to someone to review, that’s probably fine. But if you regularly give free meals or hotel stays to bloggers who tend to post glowing reviews, that might be different.

This issue can come up in social media campaigns if your employees begin praising your products online. If they do, you’ll probably need to make clear that they work for your company.

Remember, too, that while it might be obvious that a local celebrity promoting your product on a radio ad is getting paid, it might not be obvious that a local celebrity promoting your product on Facebook is getting paid.

The issue can arise whenever consumers who praise you through social media are given a reward, even a small one. For instance, the Federal Trade Commission recently sent a warning letter to a shoe retailer that held a contest that people could enter by creating a Pinterest pinboard featuring the company’s shoes. The Commission said consumers were unlikely to realize that the creators of the pinboards were being given something valuable (the chance to win a prize) in return for posting them.

Contests and sweepstakes. Speaking of contests, you should be aware that the same rules for sweepstakes in the real world also apply to social media. Even if you merely offer a prize drawing for people who “like” you, you’ll still have to comply with a complex set of state and federal regulations, including publishing complete contest rules and making sure the offering is “void where prohibited.”

If you plan to use the name or likeness of the winners in your advertising, make sure the rules specifically say this, and that the entrants are required to agree to it ahead of time.

False advertising. Many companies make claims about a product, or promote special offers or deals, that include a certain amount of “fine print.” In print advertisements, this fine print can be included along with the ad or offer. But it can be impossible to include this information in a 140-character tweet. You’ll need to be careful that in the excitement of promoting a product or a deal through social media, you don’t leave out information that’s legally required.

Be careful whom you ‘like.’ Even just “liking” something that someone posted can cause problems. Recently, the U.S. Food and Drug Administration sent a warning letter to a maker of diet supplements that “liked” comments posted by consumers on its Facebook and Twitter pages. The problem? Some of the comments suggested that the supplements helped with various ailments – such as coughing and insomnia – for which the FDA hadn’t officially approved their use.

User-generated content. Some social media campaigns encourage consumers to submit their own content, such as YouTube videos about a product. In theory, you could become liable for anything a user does wrong – at least if you post, promote, or retweet the content.

Possible problems include trademark or copyright infringement (if the user “borrowed” an image or other content from a third party without permission), libel, deceptive advertising, violation of a right to privacy, etc.

Claims based on online content. You’ll also want to be careful about making claims in your advertising based on online or social media content. For instance, a company called Euro-Pro recently drew a reprimand from the National Advertising Division (an ad industry regulatory body administered by the Better Business Bureau) after it touted itself as “America’s most recommended vacuum brand” based on a survey of online reviews on retail websites.

The NAD said the claim was likely bogus, because only a small portion of vacuums are purchased online – Amazon accounted for 42% of the online reviews although it only sells 2% of the country’s vacuums – and there was no way to prove that the online reviews came from actual users of the products, or even that they came from the U.S.

Image courtesy of Stuart Miles at

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