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News & Publications - Legal Briefing
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| Look Before You Leap Into Social Media Marketing, March 2010 |
Many companies are tripping over themselves in the rush to jump headfirst into the world of social networking. A relatively new phenomenon from a corporate point of view, the rapidly growing popularity of sites such as Facebook, My Space and Twitter, has persuaded these companies that they need to get involved in Web 2.0 one way or another – by creating a profile page, a fan page, or by tweeting or blogging.
In a recently published forecast eMarketer estimated that worldwide marketing spending on Facebook alone will increase by 39% from $435 million in 2009 to $605 million in 2010. International brands such as Starbucks, Coca Cola and Nutella are among the 30 most popular Facebook pages at present.
What companies often fail to understand is the wide array of potential legal risks that arise from social media marketing. There have been few court decisions regarding this relatively novel marketing technique as yet. It may only be a matter of time, however, before a company faces claims for substantial damages or even criminal charges as a result of engaging in social media marketing without understanding the legal implications of doing so.
Some of the inherent risks are similar to those that can arise from the use of an ordinary commercial website, but extra care is needed to navigate the myriad of regulations which are relevant in the context of social networking.
If a profile page is used to engage in direct marketing activities, the Electronic Privacy Regulations 2003 (S.I. 535 of 2003) may apply to unsolicited direct marketing communications sent by the owner. Failure to comply with these Regulations may see the owner found guilty of a criminal offence. Each communication sent in breach of the Regulations constitutes a separate offence and can result in substantial fines - up to €5,000 per offence on summary conviction for a company, and the greater of €250,000 or 10 per cent of its turnover on conviction on indictment.
Processing of personal data collected on a profile page must be carried out in accordance with the Data Protection Acts 1988 and 2003. Failure to do so constitutes a breach of these Acts and could result in investigations and enforcement actions by the Data Protection Commissioner.
Content on a profile page might infringe the intellectual property rights of another person, and may also be defamatory. Under the new Defamation Act 2009 a competitor company may make a claim for defamation, whereas previously only a natural person could bring a claim for defamation.
Where a profile page includes an interactive area, a visitor could post material that is unlawful, infringes a third party’s rights or is otherwise inappropriate. There is a risk that the owner of the profile page may be held liable for such material, as statutory protections available to internet service providers under the European Communities (Directive 2000/31/EC) Regulations 2003 (S.I. 68 of 2003) may not apply to other businesses.
If content is inaccurate or misleading a third party who relies on it and suffers loss may be entitled to make a claim for damages against the owner of the profile page. Likewise, content on a profile page may be used by a third party in a manner which is not acceptable to the profile page owner. For example, artwork or music included on a profile page may be copied or otherwise misused. In the absence of express wording to the contrary, the profile page owner may be considered to have implicitly consented to the use of such materials and may not have any remedy available to it if they are misused.
Marketing material on a profile page may be subject to advertising standards and codes of conduct. For example, the Advertising Standards Authority of Ireland’s (ASAI) Code of Standards deals with marketing aimed at children. Since social networking sites are widely used by children care should be taken to ensure that marketing material on a profile page complies with the ASAI Code.
A website owner who wishes to address the above risks should include two separate documents on their website. First, website terms and conditions are intended to exclude or limit the potential liability of the website owner and impose obligations on a visitor to the website. In addition, in order to ensure compliance with the Data Protection Acts, a website owner should include a separate privacy policy which informs visitors of the use and disclosures that will be made of their data and allows them to express their marketing preferences in accordance with the Electronic Privacy Regulations.
A social networking site will have both terms and conditions and a privacy policy. These, however, are drafted by the operator of the site and are intended to protect the operator only. They are unlikely to limit or exclude the liability of an owner of a commercial profile page on the network, or to address such a person’s data protection obligations.
For example, in December 2009, Facebook updated its own set of guidelines governing the publicising of any competitions or promotions on Facebook by the ‘owner’ of a page. This may include advertising a competition through a status update or similar. These guidelines are designed to protect Facebook and do not protect the ‘owner’ of the page who, according to the guidelines, is ‘fully and solely responsible and liable for… (the) promotion.’
A number of practical steps may be taken by the owner of a profile page with a view to addressing the above risks. For example, the owner could ensure that, where possible, content posted on the page is properly vetted to prevent defamation and the infringement of third parties’ rights. The risk, however, is that if defamatory or infringing material slips through the net, the owner could be deemed to have knowingly published such material.
As such, a profile page owner may prefer not to vet the content but to implement robust terms and conditions governing acceptable use of the profile page. Such terms and conditions could be similar to website terms and conditions but extra care would be required to ensure that they would be legally binding while not making the profile page unattractive to visitors. In addition, the owner would need to address its obligations under the Data Protection Acts and/or the Electronic Privacy Regulations. In particular, it may be necessary to include a privacy policy on a commercial profile page.
Given the above, the legal risks and associated reputational risks involved in the use of a commercial profile page require careful consideration before a business decides to jump on board the social networking bandwagon.
An edited version of this article was published in the Sunday Business Post 7 March 2010.
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