Who Is Dealing With Social Media Policies?

Employees at Rabobank International are banned from social media Web sites during the work day, and the bank also forbids them from discussing company business on sites after work, according to associate general counsel Andrew Sherman.

In contrast, employees at Deloitte Financial Advisory Services LLP are encouraged to use sites such as Facebook, Twitter, and LinkedIn, says Jeffrey Seymour, who leads the company's analytic and forensic technology practice in the Northeast.

Companies Adapt Policies to Their Needs

The contrast echoes the results of a recent Deloitte survey on corporate use of social media. “The main observation is that there is no consensus on how to deal with this issue, or on who in a company should deal with it,” Seymour says.

The survey results show that 38% of the 1,700 respondents didn't know who was dealing with the issue in their company. The remaining answers were spread across human resources, compliance, marketing, and, at the bottom of the list, the legal department.

And while 84% say companies should have policies in place to address social media risks, only 35% say they do have them. But the risks of social media ' legal and reputational ' are real, and companies need to deal with them, Sherman and Seymour both say.

Sherman, of Rabobank, says his company simply applies its overall media policy to social media sites. “We block access from any Rabobank computer. People shouldn't be on social networking sites during work day. They can participate on their own time and on non-bank-related topics.”

That doesn't work for companies like Deloitte, which hopes to attract attention, business, and new hires through social networking. As many other companies do, too.

Attorney Linda Goldstein, partner at Manatt, Phelps & Phillips in New York, says many brands and advertisers want to harness the power of social media networks. Goldstein chairs her firm's advertising, marketing and media group.

“I look at social media as consumer-to-consumer advertising,” Goldstein says, “because that is how the FTC (Federal Trade Commission) looks at it.”

She pointed to the FTC's new guidelines about testimonials and endorsements that require a company to disclose if it has paid, or even given a gift, to a blogger or to someone posting on YouTube. (See, “The FTC's New Endorsement Guides” and “ The FTC Blog Rules: Overbroad or Overblown?” in the November 2009 issue of Internet Law & Strategy.)

Social Media Policy Required

Goldstein says she advises companies that decide to engage in, or allow their employees to engage in, social media sites to first establish a policy. “The company has to tell the employees what they can and cannot do, and it has to educate them.”

The danger with social media, she says, is that the company cannot control the conversation: “You have to cede some control to the blogger, so the greatest risk becomes what if it takes a negative turn.”

She recalled a Starbucks Corporation promotion on Twitter that was hijacked by an anti-Starbucks group. The group spread nasty statements about the coffee company all over the Web.

And then there was the case of the guy whose guitar was damaged by workers at United Airlines. When he couldn't obtain satisfaction, he wrote a negative song about the airline and posted it on YouTube. It was an instant Web hit.

Even law firms aren't immune. One California firm has become the target of an especially vicious attack by a blogger who has also created Web pages about why the law firm “sucks.” The firm declined to comment for this article.

“The instincts that companies have about how to react to negative situations may not apply to social media, because it is so viral, transparent, and uncontrollable,” Goldstein warns.

The FTC understands that it is an uncontrolled environment, she says, but “it does expect marketers to educate employees about transparency and to monitor their social media activities.”

Although there hasn't been a major case brought against a company over social media yet, a recent FTC investigation of Ann Taylor Stores “sent chills down the spine of the marketing community,” according to Goldstein.

It seems the clothing retailer invited fashion bloggers to preview a show and provided them with gifts. When the bloggers failed to disclose the gifts as they wrote about the show, the FTC said Ann Taylor had violated the new rules about transparency.

The agency closed the investigation with a warning letter, Goldstein says. “It was a slap on the wrist, but it was designed to be a huge warning signal to industry that they (FTC) are very serious about the guidelines.”

Conclusion

The bottom line is that companies need social media policies for the organization itself, as well as for its employees and advertising agencies.

“One of the things we've found as we talk with [executives about] brands is they feel like the public relations and marketing agencies are not adequately informed about risks and legal requirements regarding the use of social media,” Goldstein observs. “We tell our clients to choose their vendors very carefully.”

Employees at Rabobank International are banned from social media Web sites during the work day, and the bank also forbids them from discussing company business on sites after work, according to associate general counsel Andrew Sherman.

In contrast, employees at Deloitte Financial Advisory Services LLP are encouraged to use sites such as Facebook, Twitter, and LinkedIn, says Jeffrey Seymour, who leads the company's analytic and forensic technology practice in the Northeast.

Companies Adapt Policies to Their Needs

The contrast echoes the results of a recent Deloitte survey on corporate use of social media. “The main observation is that there is no consensus on how to deal with this issue, or on who in a company should deal with it,” Seymour says.

The survey results show that 38% of the 1,700 respondents didn't know who was dealing with the issue in their company. The remaining answers were spread across human resources, compliance, marketing, and, at the bottom of the list, the legal department.

And while 84% say companies should have policies in place to address social media risks, only 35% say they do have them. But the risks of social media ' legal and reputational ' are real, and companies need to deal with them, Sherman and Seymour both say.

Sherman, of Rabobank, says his company simply applies its overall media policy to social media sites. “We block access from any Rabobank computer. People shouldn't be on social networking sites during work day. They can participate on their own time and on non-bank-related topics.”

That doesn't work for companies like Deloitte, which hopes to attract attention, business, and new hires through social networking. As many other companies do, too.

Attorney Linda Goldstein, partner at Manatt, Phelps & Phillips in New York, says many brands and advertisers want to harness the power of social media networks. Goldstein chairs her firm's advertising, marketing and media group.

“I look at social media as consumer-to-consumer advertising,” Goldstein says, “because that is how the FTC (Federal Trade Commission) looks at it.”

She pointed to the FTC's new guidelines about testimonials and endorsements that require a company to disclose if it has paid, or even given a gift, to a blogger or to someone posting on YouTube. (See, “The FTC's New Endorsement Guides” and “ The FTC Blog Rules: Overbroad or Overblown?” in the November 2009 issue of Internet Law & Strategy.)

Social Media Policy Required

Goldstein says she advises companies that decide to engage in, or allow their employees to engage in, social media sites to first establish a policy. “The company has to tell the employees what they can and cannot do, and it has to educate them.”

The danger with social media, she says, is that the company cannot control the conversation: “You have to cede some control to the blogger, so the greatest risk becomes what if it takes a negative turn.”

She recalled a Starbucks Corporation promotion on Twitter that was hijacked by an anti-Starbucks group. The group spread nasty statements about the coffee company all over the Web.

And then there was the case of the guy whose guitar was damaged by workers at United Airlines. When he couldn't obtain satisfaction, he wrote a negative song about the airline and posted it on YouTube. It was an instant Web hit.

Even law firms aren't immune. One California firm has become the target of an especially vicious attack by a blogger who has also created Web pages about why the law firm “sucks.” The firm declined to comment for this article.

“The instincts that companies have about how to react to negative situations may not apply to social media, because it is so viral, transparent, and uncontrollable,” Goldstein warns.

The FTC understands that it is an uncontrolled environment, she says, but “it does expect marketers to educate employees about transparency and to monitor their social media activities.”

Although there hasn't been a major case brought against a company over social media yet, a recent FTC investigation of Ann Taylor Stores “sent chills down the spine of the marketing community,” according to Goldstein.

It seems the clothing retailer invited fashion bloggers to preview a show and provided them with gifts. When the bloggers failed to disclose the gifts as they wrote about the show, the FTC said Ann Taylor had violated the new rules about transparency.

The agency closed the investigation with a warning letter, Goldstein says. “It was a slap on the wrist, but it was designed to be a huge warning signal to industry that they (FTC) are very serious about the guidelines.”

Conclusion

The bottom line is that companies need social media policies for the organization itself, as well as for its employees and advertising agencies.

“One of the things we've found as we talk with [executives about] brands is they feel like the public relations and marketing agencies are not adequately informed about risks and legal requirements regarding the use of social media,” Goldstein observs. “We tell our clients to choose their vendors very carefully.”