The Small-Business Owner's Guide to Advertising Injury


Chapter 6: The High Cost of Advertising Injury Lawsuits

Given the popularity of social media and its widespread use, it's no wonder courts are still trying to figure out how existing laws apply to the new technology. But while the law tries to keep up, social media continues to give rise to copyright, trademark, defamation, and privacy disputes.

From celebrities all the way to freelancers, anyone can face a dreaded Twitter libel (aka "twibel") lawsuit. Courtney Love barely dodged a hefty defamation claim, and a British transcriber's tweet nearly cost her $82,630.

These cases only scratch the surface of the many violations your business could be accused of for its social media posts. You could be sued for copyright or trademark infringement if you post someone else's work improperly. A trademark infringement case that goes to trial can cost $150,000 to $250,000 in attorney's fees alone.

Advertising injury lawsuits contribute to the $105.4 billion small businesses paid — in a single year — for expenses related to lawsuits, according to a 2010 study conducted by the U.S. Chamber of Commerce's Institute for Legal Reform. Not to mention…

  • Small-business owners paid $34.6 billion out of pocket (i.e., insurance didn't cover that amount).
  • Of all the business tort liability costs that year, small businesses carried 81 percent of the expenses.

You can read's press release, "Lawsuits Cost Small Businesses $105 Billion, Study Shows," for more details. But the moral of the story is this: lawsuits are no small matter for small businesses. Even when a tort is ultimately dismissed, your business bears the cost of hiring an attorney and has to deal with lost business income for the days you take off work to meet with your counsel and appear in court.

So how much can a lawsuit over a social media slipup cost your business? Let's take a look at social media user Beth York's case to illustrate how a claim can financially burden your business.

Next: Part 1: Advertising Injury Lawsuits: A Social Media Case Study

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