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The Growing Risk of Speaking out on Social Media

As people become more outspoken online, it's more important than ever for business owners and managers to refrain from making incendiary comments or taking political stands in their social media feeds.

With politics really heating up all over the country, many businesses have suffered backlashes for their actions or postings on Facebook, illustrating the importance of keeping a low profile if you are running a business.

Consider:

  • The owner of a Massachusetts coffee shop closed her business because of the firestorm created when her daughter, the store's manager, made anti-police comments on Facebook.
  • A Pontiac business owner in Troy, MI, received a major online backlash after a photo containing a racial slur was posted to his Facebook page. The effects were swift for the company, and hurt its sales, according to local news reports.
  • An Arizona restaurant was forced to close its doors indefinitely after a politically charged Facebook post about the president and the national anthem kneeling controversy that the eatery's owners wrote prompted mass criticism from social media users.

Social media can be a great way for a business to market its products and services and engage with its customers and the public at large, but as the above examples illustrate, it also carries a number of risks.

Not only that, but your company is vulnerable to swift and potentially harsh criticism for any actions or stances it takes or if it causes any damage as a result of its operations.

Also, statements or comments by management or employees are taken by the public or customers to be representative of the company, more than posts made by individuals.

Besides reputational damage, other key risks include:

Consumer protection laws - You may breach consumer protection laws by making false or misleading representations about products or services.
Breach of privacy laws - This could arise if you or one of your staff publishes (even inadvertently) confidential information on social media. This could even apply to a private account of someone who has access to any records in question that may be divulged.
Defamation, libel or slander - A company representative may make defamatory statements about someone or a group of persons on your social media. It should also be noted that as material that is published online is typically available throughout the world, this could in certain circumstances expose the business to claims or suits in jurisdictions outside of where its key business operations are.
Copyright infringement - A company representative may publish something with copyright issues.

The takeaway
If your company has any type of social media presence, you need to devise and implement social media policies for your business accounts as well as for employees. If you don't, you are leaving yourself open to a raft of potential liability, damage and costs.

But sometimes, even with the best policies in place, people can still act out of line, or go rogue.

General liability insurance - Your general liability policy broadly protects you from third party lawsuits brought against you for reasons such as harm to another company or individual's reputation, copyright infringement, libel or slander. Generally, this coverage could help you in the case of a social media lawsuit.

That said, all commercial policies are different, and there are limits to what it would cover. For example, many policies do not cover media-related lawsuits.

Umbrella policy - This would kick in in the event of an action where the limits of your general liability policy are breached. It would give you an added layer of protection.

Media liability coverage - This type of errors and omissions coverage was originally designed for publishers and media outlets, but it can now be tailored to a specific business based on the named perils it covers. It could include coverage for:

  • Defamation, libel and slander
  • Invasion of privacy
  • Copyright infringement
  • Breach of implied contract, license agreement, or product placement agreement

The one area there is no coverage for is a company representative making social commentary that upsets people enough to boycott a business, leading to a severe drop in business. That's why you'll want to create that social media policy - and stick to it. 

Thank you for visiting the Partners Insurance Agency blog. We hope you found our content helpful and informative.


Posted 3:00 PM

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