Social Networking Policy May Protect Employers From Federal Trade Commission Violations

The Federal Trade Commission (FTC), the agency responsible for protecting consumers from fraudulent, deceptive and unfair business practices, has for the first time since 1980 published new guidelines about the use of endorsements and testimonials.  While the issue may seem broad, the mention of 'social media' and 'blogging' and the perception that employees may be considered by consumers as 'paid endorsers' is a reminder for employers who haven't already created effective social media policies to do so. The new guidelines, which went into effect December 1, 2009, suggest that the use of social media, such as Facebook and Twitter, may increase an employers potential liability for violation of the Federal Trade Commission Act, making cause for the FTC to take actions against a company whose employees comment on company products or services without disclosing the employment relationship, even if the comments are not authorized or sponsored by the company.  The presumption is that they are doing so with the company's blessing or for the company's benefit.  Social networking sites reach millions of people at a time, which increases employer exposure to liability under the guidelines if consumers later claim they were misled into purchasing dangerous or defective products by an employee's comments. While the FTC says it is not likely to take action against a company for the conduct of a single "rogue" employee who violated company policy, they have already taken action against companies "whose failure to establish or maintain appropriate internal procedures" resulted in a consumer injury.  As a result, employers who do not already have a social media policy in place should consider one that specifically outlines what conduct is permitted by employees, and describes how to clearly post a disclosure statement when discussing an employer or the employer's products or services.  Having such a policy may help to minimize an employer's liability under the guidelines.