Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Could Your Company’s Social Media Activities Expose You to Legal Liability?

Author: Scarinci Hollenbeck, LLC

Date: June 16, 2015

Key Contacts

Back

Last year, Cole Haan Inc. received a letter from the Federal Trade Commission (FTC) that alleged its photo contest on the popular social media website, Pinterest, violated Section 5 of the Federal Trade Commission Act. This contest incident proposes to all business owners, could your company’s social media activities expose you to legal liability?

According to the FTC, the shoemaker should have more conspicuously disclosed that users tagging their photos with hashtag #wanderingsole were offered a financial incentive to participate in the contest. Because many businesses are similarly unaware of their legal obligations in regards to their company’s social media activities, the FTC recently updated its enforcement guide regarding the use of endorsements. The revised “FTC’s Endorsement Guides: What People Are Asking” addresses the use of endorsements on a number of social media platforms, including YouTube, Facebook, and Twitter.

Under the FTC Act, businesses are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. The FTC defines endorsement as any advertising “that consumers are likely to believe reflects the opinions, beliefs, findings or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”

In its latest guidance, the FTC makes it clear that the rules regarding false advertising apply equally to online activities. Although the FTC does acknowledge that it can be more difficult to determine every circumstance in which such rules apply, it does offer a few key takeaways:

Social media contests: The FTC presents the following scenario as an example of a social media contest that fails to properly notify readers that the post was incentivized: “Participants have to send a Tweet or make a pin with the hashtag, #XYZ_Rocks.” According to the agency, it is likely that many readers would not understand such a hashtag to mean that those posts were made as part of a contest or that the people doing the posting had received something of value (in this case, a chance to win the contest prize). As for what does work, the FTC advises that including the word “contest” or “sweepstakes” as part of the hashtag should be sufficient.

Employee endorsements: If your company allows employees to use social media to talk about your products, the FTC advises that you should make sure that the relationship is disclosed to people who read the employee’s online postings about your company or its products. The agency further states that the employees listing where they work on their profile page isn’t enough because not everyone will read the profile.

Outsourcing social media: While many companies use public relations or marketing firms to manage their social media, the FTC makes it clear that your company is ultimately responsible for what others do on your behalf. It recommends making sure that the firm has an appropriate program in place to train and monitor members of its social media network.

Do you have any feedback, thoughts, reactions or comments concerning this topic? Feel free to leave a comment below for Fernando M. Pinguelo and follow the twitter accounts @CyberPinguelo and @eWHW_Blog for timely comments on related issues. If you have any questions about this post or would like assistance with your legal needs, please contact me or the Scarinci Hollenbeck attorney with whom you work. To learn more about data privacy and security, visit eWhiteHouse Watch – Where Technology, Politics, and Privacy Collide (http://ewhwblog.com).

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now post image

A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now

Few situations create more uncertainty than learning that an employee has filed a whistleblower complaint. Questions arise immediately: Is the allegation legitimate? Should the employee be placed on leave? Do we need to notify our insurance carrier? Are we now prevented from disciplining the employee if there are unrelated ongoing work related issues? There is […]

Author: Sean M. Pena

Link to post with title - "A Whistleblower Just Filed a Complaint Against Your Company: Here's What to Do Now"
Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses post image

Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses

When a business reaches the point where it can no longer service its debts or otherwise resolve its liabilities, management is often faced with a difficult question: is a bankruptcy filing necessary or is there another way to perform an orderly liquidation or sale of the business assets? While Chapters 7 and 11 of the […]

Author: John D. Giampolo

Link to post with title - "Assignment for the Benefit of Creditors: An Alternative to Bankruptcy for Distressed Businesses"
Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know post image

Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know

For many years, the New Jersey Mansion Tax has been a significant consideration in high-value real estate transactions. Recent legislative changes, however, have substantially altered how the tax operates, including who is responsible for paying it and the amount owed in certain transactions. Whether you are purchasing, selling, or investing in New Jersey real estate, […]

Author: George McGowan

Link to post with title - "Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know"
Estate Planning for Digital Assets Under New Jersey Law post image

Estate Planning for Digital Assets Under New Jersey Law

As our personal and financial lives increasingly move online, estate planning must evolve to address a new category of property: digital assets. From email accounts and social media profiles to cryptocurrency and cloud-stored business records, these assets often carry both financial and sentimental value. Yet, without proper planning, they can become inaccessible—or even lost—upon incapacity […]

Author: Marc J. Comer

Link to post with title - "Estate Planning for Digital Assets Under New Jersey Law"
The Role of Representation and Warranty Insurance in M&A Transactions post image

The Role of Representation and Warranty Insurance in M&A Transactions

In today’s mergers and acquisitions market, representation and warranty (R&W) insurance has become a common feature of deal negotiations. Once used primarily in larger transactions, R&W insurance is now frequently incorporated into middle-market deals as buyers and sellers look for efficient ways to allocate risk and close deals. When structured properly, R&W insurance can help […]

Author: George McGowan

Link to post with title - "The Role of Representation and Warranty Insurance in M&A Transactions"
You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What? post image

You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?

Receiving a federal grand jury subpoena is not something most businesses or individuals anticipate. While it can be concerning, a federal grand jury subpoena does not necessarily mean that you are being accused of wrongdoing. It does, however, mean that a federal criminal investigation is underway and that federal prosecutors believe you may possess information […]

Author: Sean M. Pena

Link to post with title - "You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.
“If you would like to submit a file, please email it directly to info@sh-law.com.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!