Risky business – or manageable risk?

by | May 25, 2011 | Best Practices, Blog, Blog Archive, Industry News | 0 comments

Risk family headstone, Sleepy Hollow, NY http://flic.kr/p/5VubGe

An interesting question was asked recently during a webinar titled Marketing & Compliance in a Regulated Environment (presentation downloadrecorded webinar — Q&A).

The two-part question came up after one of the panelists said that companies in a regulated environment should “vet” links and comments. The first question was:  What do you mean by “vetting” a link or third-party comment?

Panelist Deb McAlister replied that “vetting” is marketing jargon for investigating, and apologized for using the term without defining it. Then she joined panelist Mike Wise in a discussion about why vetting (or moderating) links and comments is important. She said that linking to third-party content can introduce regulatory and liability exposure because linking implies an endorsement.

The case-law on liability exposure here is still developing, but in 2009 the Federal Trade Commission (FTC) published guidelines on testimonials that most marketers believe cover links included in social media.

Because this is a gray area in the rules, the best policy is not to link to third-party content unless you know the third-party. Even when linking to a trusted third-party site – such as FINRA or the FTC – many insurance carriers providing errors & omissions (E&O), Employers Practice Liability Insurance (EPLI) or other forms of professional liability insurance for first party (for claims from employees against employers) or third-party (suits made by clients, or non-employees) for actions on web or social media sites ask companies to add a pop-up window with a disclaimer before the third-party link opens. Here is a sample of such a disclaimer:

“By clicking social media or web links, you are leaving the (COMPANY) website (Facebook page). Clicking a social media or web link will redirect you to a site that is not associated with (COMPANY). The privacy policy of (COMPANY) does not apply to the site you are visiting, and we recommend that you review the website’s privacy policy. (COMPANY) has no responsibility for any external site. We are not responsibility for the availability, opinions, products, services, or content that is offered or displayed on other sites.”

(Here’s our disclaimer: The editor of this blog and panelists from the Marketing and Compliance in a Regulated Environment webinar are not attorneys, and nothing in the blog, webinar or any associated document purports to provide legal advice. We strongly suggest that you consult a competent attorney well-versed in social media, regulatory compliance and related matters before adopting any social media policy or disclaimer.)

The attendee followed that question up with a second, more pointed question. Exactly what kind of liability risk comes with digital and social media?

That’s an important question because, in most regards, the risks are the same as they are for other business activities that involve marketing communication. You have to avoid making false and misleading statements and violating other rules. For most marketers, complying with the rules is just part of the day-to-day job of selling products and services.

But somehow, when it comes to social media, what seems crystal clear in other areas seems clouded and obscure. It shouldn’t be that way, according to Mike Wise. “The guidelines are actually very helpful, and the rules and regulations aren’t that burdensome,” he told the audience.

Errors and omissions and personal injury are the two big areas of risk for third-party claims in social and online media. Errors and omissions is a kind of shorthand for insurance which gives physicians, attorneys, architects, accountants and other professionals coverage for claims by patients or clients for alleged professional errors and omissions which might otherwise amount to negligence. If your firm has this kind of insurance, it’s a good idea to check policy coverage for web and social media activities.

In the world of digital and social media, personal injury refers to claims of libel, slander, emotional duress and copyright infringement. Many professional services and errors & omissions policies exclude personal injury claims, so this is another item to check with your insurance carrier.