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Cyber Laws & Social Media Marketing: What Small Businesses Need to Know to Avoid Advertising Injury Lawsuits

30. January 2014 13:36

Man drops coffee because of offensive computer content.

So far in our series on the advertising injury risks small businesses run by using social media, we’ve mentioned the kinds of online activity that can trigger an advertising injury lawsuit and illustrated some real-world suits that have cost people serious money.

But advertising liability lawsuits are not the only way small businesses can get into trouble with social media. While social media defamation suits can be expensive, they typically play out in civil court. With other kinds of cyber offenses, however, small businesses could find themselves facing criminal charges, which can come with costly fines and even jail time.

Read on to find out how a single social media post can lead to costly court cases and criminal charges for a small business – and how to keep your business out of trouble.

An Increase in Cybercrime 

According to the Wall Street Journal's article, "Annual U.S. Cybercrime Costs Estimated at $100 Billion," cyber attacks, hacks, and harassment are on the rise – and it's costing people big-time. From the high cost of litigation to sort out losses and fines to repairing relationships with the public, businesses can suffer major financial losses from their online comments.

But some digital offenses are more than just expensive. Some qualify as crimes. Let's take a look at some offenses you may inadvertently commit when you market your business's products or services on social networking sites. In addition to triggering an advertising injury lawsuit against your business, any of these offenses could lead to criminal charges.

Obscene Electronic Communication

When it comes to cybercrimes, "obscene electronic communication" refers to unwanted and persistent contact over the phone or Internet (i.e., email or social media interaction). Even if you hire a company to tweet or interact through social media on behalf of your business, you could still be held accountable if the recipient finds the communication to be…

Your company can be prosecuted for committing obscene electronic communication if the state can prove that…

Many jurisdictions don't care whether or not a conversation ensues for the offense to be punishable. Penalties for the crime range from fines to imprisonment, but the punishment depends on where you live.

And there are other obscenity laws to bear in mind, too. Remember that more than 25 jurisdictions in the U.S. ban certain kinds of speech. For instance, when publishing content online, you could be subject to legal action if you post racist, politically subversive, seditious, or inflammatory material that could incite hate crimes.

Again, legal consequences depend on where you live. But it only takes one person or one group to see your comments as obscene (or slanderous or libelous) for you to be faced with an advertising injury lawsuit or worse.

Cyberstalking / Cyber Harassment

Other potential cybercrimes to be aware of are cyber stalking and cyber harassment.

As a rule, any electronic comment that may be found derogatory or offensive could be considered harassment. This is a reminder to be careful about what you post online, as the legal consequences may be surprising and hurt your business's public reputation.

To find out what your state's cyber stalking and harassment laws are, check out the chart "State Cyberstalking and Cyberharassment Laws," by the National Conference of State Legislatures.

The Real World Repercussions of Online Transgressions

It's not just the public that poses a threat when it comes to potential obscene electronic communication and harassment offenses. Your business could be on the hook for cyber harassment that your own employees face, too.

In Espinoza v. County of Orange, the California Court of Appeals upheld a $1.6 million verdict against an employer for failing to take action against an employee's cyber harassment by coworkers on a blog. Even though the employee reported the online harassment, the supervisor failed to take the appropriate measures to resolve the problem. The most fascinating thing about the case is that the employer was held liable for the Internet crime even though it happened outside the workplace.

Creating a Company Social Media Policy

Now that you know which cybercrimes to be wary of, the next step is to ensure you and your employees understand how to avoid committing them. Though some small business insurance policies can safeguard your business against an array of social media legal entanglements, it's best to avoid a fiasco in the first place. (You can read more about social networking disasters General Liability Insurance can cover in the blog post "What Is Advertising Injury and How Does It Affect Social Media Marketing?")

You may consider creating a social media policy to help keep everyone on the same page – especially if a handful of employees manage your small business's online presence. Your social media policy should outline what is and is not acceptable to publish online. That way, if someone breaches the policy, you can make a case for your business.

Consider including…

And remember, if your staff networks on sites like LinkedIn under your company's name, those connections could belong to the business. Be sure to clarify this issue in your business's policy.

This post is part of an ongoing series on advertising liability. Stay tuned for more on how your business can make the most of social media while avoiding advertising injury liabilities! 

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Advertising Injury | General Liability Insurance | Small Business | Small Business Risk Management | Tips for All Small Businesses

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