Social media. Brands have trained themselves to be earnest on it. Transparent. Responsive but not reactive. Smart but spontaneous. Fun and fearless.

But are they too risky — regardless of their social media voice?

Apparently, they are risky enough that one lawyer is staking his career on it. Ethan Wall has founded the country's first law firm dedicated solely to legal issues related to social media, called of all things, The Social Media Law Firm.

Risks and More Risks

Inside and outside, companies face risks associated with social media, he said.

There's the exposure from vicarious liability, which holds companies liable for what their employees say on social media, whether that's in the performance of work duties or during their downtime on personal computers on social activity that may or may not be related to their employment.

Wall looks no farther than some of the supposed best brands on social media, Burger King and Taco Bell, for instances of serious risks realized when employees weren't trained and monitored. Like the news story of employees posting about licking taco shells or stomping lettuce.

Sure, those are old examples, but companies not only have to be wary of employees; they must be wary of their social media pros … their marketers — if their official marketing or engagement activities on social violate advertising laws and regulations.

False and Misleading

Wall conjures up a fictional financial institution that breaks federal law by promoting a loan product without the proper disclaimers. Or take his real financial example:

"Social media legal risks are not strictly limited to irresponsible teenagers. Just last month the Securities and Exchange Commission filed securities fraud charges against a trader whose false tweets caused sharp drops in the stock prices of two companies and triggered a trading halt in one of them," Wall said.

The trader supposedly created fake Twitter accounts, making them appear like the accounts of known securities research firms, then tweeted false statements about two companies.

Despite these risks, the known unknowns and unknown unknowns, the corporate investment in social media will of course not slow down, but perhaps a focus on quality is needed.

$100B Annual Spend

Another law firm with its sights on social media risk, San Francisco-based Morrison & Foerster, recently created an infographical research project that highlighted social media trends, like the fact that social media marketing spend exceeded $7.5 billion in 2014 and that by 2017 the social ad spend is expected to hit $100 billion.

Then again, there’s the bad.

According to its research, Morrison & Foerster found that 58 percent of consumers who tweeted about a bad brand experience never received a response.

Perhaps it's because 70 percent of brands spend their time on Twitter merely broadcasting, and up to 83 percent of retailers ignore customer questions (those that do respond make consumers wait an average of 12 hours).

Only 15 percent of marketers can demonstrate social media's quantitative impact on their business, and only 41 percent said their company is fully capitalizing on social media data.

Learning Opportunities

While these numbers do not illustrate legal liability specifically, what they do show is that many social media marketing operations are not tight ships. And loose ships can sink.

3 Risk Prevention Strategies

Wall has three suggestions to mitigate social media risks and to build an operation running on best practices.

The first is to conduct a social media risk assessment, which will uncover risks specific to a company and its industry.

"As you can imagine, there may be a higher level of risk in heavily regulated industries like financial services and health care — but even mom-and-pop shops with a single Twitter account can be exposed to social media dangers," Wall said.

The next step is for companies to develop social media policies and compliance procedures, which make it clear to employees what is appropriate and legal behavior and what is prohibited. Again, these need to be customized to company and its industry.

"Besides the fact that no two companies are alike, social media policies are governed by federal laws—and if a company institutes a workplace rule or policy that would prohibit employees from engaging in protected activities, the can face serious legal programs," he said.

Another step is for companies to secure their trademark and intellectual property rights. For anything created in-house or by a third party.

They should also protect their brands by securing handles on relevant social media accounts, even if they don't plan on actively using them.

So in other words, despite the risk (or because of it), brands should be on social media even if they're not active. I suppose that would count as being smart and fearless.

Title image by Marius Fiskum

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