Monday, March 5, 2012

The Changing Face of Social Media: Understanding the Legal and Regulatory Risks

The evolution of social media has presented challenges that must be addressed to ensure businesses are fully protected against legal and regulatory issues. The value of social media mediums, such as Facebook, LinkedIn, and Twitter, cannot be dismissed. They can assist businesses in engaging and informing their target audience.

Social media can also increase your revenue and target specific clients to increase market share and influence consumers. Businesses engaged in direct mailers and other closely related areas should pay particular attention to the complex issues we are now confronting. Savvy businesses have a game plan to address these issues before they become a problem.

Consider the following legal and compliance risks you may face in the world of social media and how you can avoid being swept up into an unexpected legal issue or regulatory fine:

Review legal issues: New case law is being introduced daily which deals with e-discovery. These include email, files, and other electronically stored information (ESI) which can be used against a business in legal proceedings. As case law evolves there can be instances where social media communications and interactions can be used in court cases involving copyright laws, trade libel, and other corporate litigations. Mailers who engage in social media should be aware of the legal ramifications using social media and prepare a course of action to preserve social media communications in the event of litigation.

Be aware of regulatory rules and regulations: Mailers who engage within the financial world should be aware of the recent statements by the Financial Industry Regulatory Authority (FINRA). They publicly stated that social media was becoming a relevant issue within their examinations and cautioned against ignoring social media’s increasing high profile. Regulators are moving toward developing social media compliance for the financial industry. Savvy business owners will address social media issues head-on and confront them before any problems arise. FINRA has the power to levy stiff fines against businesses who engage in practices they deem inappropriate as in the case of a California-based broker who was fined and suspended for tweeting what was deemed “misrepresentative and unbalanced” information.  

Develop a broad-based social media plan: The legal and regulatory risks of social media cannot be overlooked. Take the time to organize a comprehensive social media policy which addresses corporate liabilities and regulatory risks, employee conduct within social media as well as public conduct within your social media sites.   

Reflect on your long-term company objectives: Mailers should determine their social media policies and view their long-term goals and objectives to ensure compliance and long-term storage of communications. Focus should be placed on implementing social media policy and understanding the ever-evolving world of social media to ensure your company is well-protected in the event of corporate litigation or regulatory oversight. 

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