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It’s all likes and smileys until you break the law: 4 ways social media can ruin your business


You thought social media is great for business? You’re dead wrong. And right. Both.

Let me explain – social media is not just great for business, it’s a necessity for engaging and communicating with your prospects, clients, partners and fans.

But social media law is something else.

It’s dangerous. Well, not Sydney Funnel Web Spider dangerous but still…it can give you the goosebumps if you hear of the fines businesses need to pay because of negligence and lack of planning.

To the rescue!

There are a million ways that social media can ruin your business because all the employment, anti-harassment and anti-discrimination laws that apply offline, apply online as well. And it’s much harder to monitor what someone says in a chat box rather than in the conference room.

Also, the regulations by the Australian Consumer and Competition Association (ACCC) make it pretty tough for businesses to get away with misrepresentation of products and misleading promises. Shivering from terror already?

Let me give you four examples I love…

1. What if an employee says something semi-true about your product….in a tweet?

According to the ACCC and employment law, that’s your fault!

After a few recent cases it’s common knowledge in the legal profession that employers are to be held responsible for employees’ posts, tweets, etc. on and off work.

This means that if an employee tweets something that isn’t true about your product, it’s your fault (social media policies help but do not exempt you from liability) which leads to one of several scenarios:

  1. You pray the ACCC isn’t aware and your prayers are heard (very unlikely)
  2. Customers see the tweet and this leads to a whole new wave of comments, conversations, etc and the ACCC notices
  3. ACCC is warned by customers or other responsible citizens and you are fined and forced to refund multiple of sales
  4. Customers buy product based on tweet, get disappointed and you need to refund all those sales

In fact those all don’t look like the end of the world, although they might be pretty unpleasant. The worst is that your reputation is ruined online (which, let’s be honest, is all that matters nowadays).

This leads to less leads and customers, mistrust, partners going elsewhere, suppliers requiring faster payments, and what not. In short – a tweet can have a pretty powerful effect.

2. What if you post a picture from the office? And someone doesn’t like it…

Seems like a good idea to increase engagement with your fans, right?

Not so good idea, especially when you didn’t get everyone’s permission. And I mean exclusive written permission, like an email reply.

The failure to respect the privacy of your employees is a big no-no in business. You might have heard of the Privacy Act? Well, not adhering to it can get you into big legal trouble, like going to court and hiring a lawyer for more hours per week than your virtual assistant.

Don’t wanna do that? Ask for permission and respect people’s privacy (yes, this means no spying as well!).

3. What’s the problem with running a contest for likes? That’s one of my favorites!

Repeat after me: special offers, competitions and awards law applies on and offline.

Before you start whatever competition online, for likes or shares or retweets, double check the state regulations. Then double check the specific social media regulations.

If you don’t one of two things can happen:

  1. You get your social media account suspended by the social network (all of your hard earned fans, likes, and shares, all of your links and messages are gone)
  2. You get a fat fine from the ACCC for running an unlawful contest.


4. What if your employee sends a funny video from the office to a friend and it goes viral?

Take a notepad and write down the first clause for your social media policy: no sharing of videos and pictures from the office without the exclusive written consent of all participants and direct supervisor.

In this case your company (remember you’re responsible for your employees’ actions?) can be sued for a number of reasons including: invasion of privacy, defamation and harassment.

And a simple social media policy could have prevented lawsuits from employees in the video and their families. It would have also allowed you to fire the perpetrator. If you fire her without such a policy you’ll spend even more days in court for wrongful dismissal.

Sounds good?

In conclusion…

Unfortunately, that’s not all. Social media presents your employees, customers and partners with endless opportunities to ruin your reputation (and in the digital age even Coca Cola can’t handle this).

But everyone says that you can’t be a modern business without a bunch of social media accounts.

So what is an honest entrepreneur to do?

1. Find a progressively-thinking, affordable lawyer and work with her to create comprehensive but not limiting social media policies.
2. Get those social media policies signed by all, I mean ALL employees.

Also, keep reading such articles. Who knows, you might learn something you had no idea about and fix it right before you get caught red-handed!

Katherine Hawes is a lawyer with two dogs as the office companions that races cars in her spare time. She has practiced law for over 15 years assisting small business grow and understand their legal responsibilities. If you want to take your knowledge of social media law one step further to leverage it in your business’ advantage, follow Katherine on Facebook, Twitter and LinkedIn so you can be the first to hear about our dates of the Social Media Law For Business workshops in your area.

Katherine Hawes