• Use of Social Media Platforms
  • January 28, 2013
  • Law Firm: Norton Rose Canada LLP - Montreal Office
  • Introduction

    Companies have jumped onto the social media bandwagon without recognising the legal risks involved.  Social media platforms are used by companies for advertising and marketing, promotional offers and competitions, online trading, as well as customer relations.  The risk when using social media as opposed to traditional forms of media is increased. The quick and easy access to customers allows for easy reputational blunders. The instant communication creates the possibility of instant infamy. And the lure of free advertising and marketing space could result in possible costly litigation.  Big companies need to be careful who they outsource these services to and what control they lose.

    As most companies are not specialists in social media, nor do they have the capacity internally to maintain a social media presence, this function is often outsourced to a specialist digital media marketing company.  Unfortunately, little attention has been paid to the actual outsource agreement with the marketing company and a standard type marketing outsource agreement is generally used.  These agreements will suffice for the most part but there are certain areas that require a specialised and tailored social media outsource agreement. 

    Insurance companies also need to be mindful of FSB Directive 159 which states that the outsourcing of insurance functions that insurers would otherwise need to perform themselves is only permitted in terms of an outsource policy and a formal agreement with the service provider.  The directive sets out clear guidelines around governance and the contractual framework that assist in managing the risks which arise in an outsource.  The directive will guide any company regarding good governance of outsource arrangements such as this.

     

    Risks

     

    Risks

    You need to ensure that you understand the legal risks that your company may face at the beginning of your social media campaign and to ensure that these risks are lessened through a suitably tailored social media outsource agreement with your marketer. 

    First, you need to be aware of the liability you may have towards your customers or any third party for posts made on your corporate profile.  Social media posts have been found to be defamatory and even criminal.  If your marketer is the one posting on your behalf, your agreement needs to cover this area of liability with suitably worded indemnities and adequate insurance.

     


    Laws

    Another risk that is often overlooked, are the rules of the social media platforms themselves.  All the popular platforms have many rules that need to be followed when you embark on a promotional campaign, online trading, competitions or even just advertisements of your products.  It is your company that will get into trouble with the platform if your marketer does not adhere to these rules. 

     


    Frequency, style and content

    Your marketer also needs to understand how often you would like to post content to your platforms.  The timing, length and frequency are all important in order to make sure you are reaching your target audience.  Language style is equally important.  A financial services company may not appreciate profanity, insults or terms such as OMG, ROFL or YOLO contained in their posts.  There is also a need for clarity as to what type of content or topics the marketer is authorised to post about, and under what circumstances prior approval is needed. 

    Lastly, you need to make certain the agreement clearly sets out the rights to termination.  For example, would you want the right to terminate the agreement if you marketer posts “Free coffee for everyone on Friday” from your corporate profile? 

    Social media is an excellent tool for most companies, and companies should not be afraid to utilise it.  Just be mindful that there are legal risks and ensure that your company is taking the necessary steps to mitigate those risks.

     



    Risks