New FTC Guidance Highlights Need For Effective Social Media Policies

While it is tempting to dismiss social media policies as simply the latest HR fad, guidelines recently issued by the Federal Trade Commission (FTC) and effective as of December 2009 make it clear that employee use of social media is a serious concern that employers ignore at their peril.

The new FTC guidelines address the use of endorsements and testimonials in advertising. Generally speaking, the guidelines require advertisers and those providing endorsements to disclose hidden financial arrangements, and make advertisers potentially liable for false or misleading statements made by endorsers. In the past, these regulations might have been a concern for the marketing and legal departments, but generally would not draw the attention of human resources. However, with the rise of Internet forums, blogs, Twitter, Facebook, podcasts, and other social media, every employee is now a potential “endorser,” with the power to reach hundreds or thousands of people with a single blog post or Tweet. Under the new FTC guidelines, employees who write or speak about their company’s products or services online may be legally obligated to clearly and conspicuously disclose their relationship with the company. Further, the company could be deemed legally responsible for false or misleading statements the employee makes online.

Fortunately, employers can mitigate their risk. In its commentary accompanying the new guidelines, the FTC acknowledges that “the establishment of appropriate procedures” regarding employee participation in social media “would warrant consideration in its decision as to whether law enforcement action would be an appropriate use of agency resources ….” The FTC also states that “although the Commission has brought law enforcement actions against companies whose failure to establish or maintain appropriate internal procedures resulted in customer injury, it is not aware of any instance in which an enforcement action was brought against a company for the actions of a single “rogue” employee who violated established company policies that adequately covered the conduct in question.”

The message to employers: If you already have a social media policy, review it to ensure that it addresses the issues raised by the new FTC guidelines. If not, make adopting an effective social media policy your new year’s resolution.

The FTC’s guidelines are currently available on the agency’s website, at http://www.ftc.gov/opa/2009/10/endortest.shtm.