4 Social Media Legal Issues Dealers Can’t Afford to Ignore
It was bound to happen. The tremendous growth of digital marketing and social media was an invitation for government regulation. For
instance, the Federal Trade Commission recently updated its truth-in-advertising guidelines, which were last revised in 1980, to address the
commercialism of the Web. Federal and state regulators are taking the position that social media is not a loop-hole for deceptive marketing
practices and are actively enforcing and cracking down on social media deception. Proper social media ethics are now a matter of law, not
just personal preference.
The FTC’s updated Endorsement and Advertising Guidelines require companies to ensure that their posts are completely accurate and not misleading, and planting or allowing fake reviews is a violation. The Guidelines are extremely broad and can apply to anyone writing reviews on rating sites, web sites or promoting products through social media sites, including blogs.
There are several companies out there that offer seemingly quick and easy ways to improve your ratings on review sites. Be careful! A
Dealership in Texas suffered devastating reputation damage because of the review-posting practices of a company
they hired. A customer
discovered that suspicious “reviewers” were writing 5-star reviews about all kinds of businesses and dealerships across the nation on the same day. This debacle was uncovered in October of 2010, yet news stories continue to show up on the dealer’s page one search results.
There are several companies out there that offer seemingly quick and easy ways to improve your ratings on review sites. Be careful! A Dealership in Texas suffered devastating reputation damage because of the review-posting practices of a company they hired. A customer discovered that suspicious “reviewers” were writing 5-star reviews about all kinds of businesses and dealerships across the nation on the same day. This debacle was uncovered in October of 2010, yet news stories continue to show up on the dealer’s page one search results.
While the above case may be an example of a dealer who unfortunately hired the wrong vendor, an area of real concern is the activity of
a company’s own employees. The FTC recently charged a California marketing company with deceptive advertising after it found that the
company’s employees were posing as ordinary consumers posting positive reviews online.
Dealers may face liability if employees use social media to comment on their employer’s services or products without disclosing the
employment relationship. The FTC requires the disclosure of all “material connections” between a reviewer and the company that is being
These connections can be any relationship between a reviewer and the company that could affect the credibility a consumer
gives to that reviewer’s statements, such as an employment or business relationship. So if employees, friends, family or vendors post
reviews to prop up a dealership’s online reputation, they must clearly disclose any relationship they have with the company. In addition, all
reviews must be an honest opinion based on a real experience. Reviewers must never endorse a product or service that they have not used
personally or create any other form of false endorsement. It’s all about transparency and full disclosure.
Besides the obvious potential damage to a dealer’s reputation, failure to follow these regulations can result in substantial penalties. In recent
actions, the New York Attorney General fined a cosmetic surgery company $300,000 for ordering its employees to write fake reviews of its
face-lift procedure and the FTC ordered a company marketing instructional DVDs to pay $250,000 for fake reviews posted by the company’s
affiliate marketers. The FTC has indicated that companies are fully responsible and liable for all inappropriate actions of their employees,
their vendors, and any advocates they recruit. Reviewers may also be held personally liable for statements made in the course of their
Paying for Reviews
The practice of offering a free oil change or gas card
to a customer in exchange for a good survey has long been frowned upon by
manufacturers. Because there are no factory gatekeepers when it comes to online ratings, it may seem tempting to offer customers an
incentive to post a positive review. The good news is that you can if you want to; the not-so-good news is that the regulations require that
any reviewer provided with any form of compensation such as free services, rewards, incentives, promotional items, gifts, samples, or review
items, must fully disclose the source and nature of any compensation received.
So, if you pay for reviews and the reviewers fail to disclose their compensation, you may face liability. This is an area where it’s easy to get
caught and besides the legal danger, your reputation will likely take a big hit.
Advertising on Social Media Sites
The wisdom of trying to “sell” on social media sites by posting inventory, prices, or payments is an ongoing debate, but the fact remains that
many dealers are engaged in this activity in some form. While I have no opinion on the relative merits of whether to “sell or not to sell” on
social media, it’s important to note the potential implications of these types of activities.
Despite the fact that social media tends to be a low-keyed, casual type of communication, advertising regulations don’t go away. In
The Federal Trade Commission recently announced that it was updating its document Dot Com Disclosures: Information About Online
Advertising. The primary focus of the document, which was first issued in 2000, is to inform advertisers that consumer protection laws and
the requirement to provide clear and conspicuous disclosures applies to the online world in addition to the offline world.
So, in a nutshell, if inventory is posted or prices/payments are quoted on social media it’s likely that the posts will be deemed to be
advertisements and will be subject to state and federal disclosure and truth in advertising regulations. Lack of space is no excuse either.
Even if you’re advertising on Twitter and limited to 140 characters, you must include a clear link to any necessary disclosures. A good
rule of thumb is to have any information that could possibly be construed as advertising reviewed by upper management or a qualified professional before it is posted.
Social Media Policy
Social media applications such as blogs, social networking, and video sharing have soared in popularity so it’s important that dealers control
the information that’s coming out of their business. Policies and procedures should be put in place to spell out how employees are expected
to conduct themselves within social media. A social media policy can help take the guesswork
out of what is appropriate for employees to
post about a company to their social networks.
There are a number of potential legal issues with employees’ use of social media that should be addressed such as the danger of possible privacy, harassment, discrimination or defamation claims. Beyond legal risks, employees can harm a company’s reputation by disseminating
controversial or inappropriate comments regarding the employer. However, employer restrictions on the use of social media can be tricky. The National Labor Relations Board (NLRB) recently issued a complaint against an Illinois dealership, alleging that the dealership unlawfully terminated an employee for making critical comments about the dealership on Facebook. While some unprofessional and inappropriate
conduct may not be protected, the intersection of social media and the NLRA is an evolving area of the law.
The best way to protect your dealership from legal trouble is by establishing formal social media policies for your staff. Companies often
get in the most trouble when they fail to train their employees about appropriate social media use and disclosure. To prevent this from
happening, it’s a good idea to create a written social media policy and training program for your company and carefully monitor social
media use Article Source: http://EzineArticles.com/6386461.