NEW FTC GUIDELINES HOLD EMPLOYERS RESPONSIBLE FOR ON-LINE BEHAVIOR OF EMPLOYEES
With the proliferation of employee activity on social media sites like Facebook, MySpace, Twitter, personal blogs and the like, the Federal Trade Commission has weighed in with new regulations that apply to what employees say about their employer's products and services. The guidelines state that when employees use social or other on-line media to comment on their company's products or services, employers may be liable for "misrepresentations" made by employees. Importantly, the guidelines hold the employer responsible in cases where the employer was unaware of the communications or did not authorize the comments. This FAQ is designed to familiarize you with these important guidelines.
What Are The New Guidelines?
The new Federal Trade Commission Guidelines (called "Guidelines Concerning the Use of Endorcements and Testimonials in Advertising" 16 C.F.R. §255 became effective December 1, 2009.
The FTC's role is to protect consumers from deceptive endorsements and advertising. Until recently, the FTC had little, if anything, to do with the employer/employee relationship. However, the FTC had not updated their guidelines in almost 30 years and realized it was time to respond to the new media that had emerged.
Under the new guidelines, liability can be imposed on endorsers and companies who fail to make required disclosures that exist between on-line posters and the companies upon which they are commenting.
For instance, one obvious relationship that must be disclosed would be the employment relationship between the on-line writer and the company. Under the new guidelines, if a consumer was misled by the on-line author into purchasing a defective or dangerous product or service, not only would the on-line author (who failed to disclose the employment relationship) be liable, but the company, who failed to prevent its employee from publicizing the communication, would be liable as well. This is so regardless of whether the communication was officially approved or endorsed by the Company.
How Does this Apply to My Company?
The guidelines provide an example of a violation which could arise within the employment setting. Envision an on-line message board where people visit to discuss new music technology and share their ideas. The on-line message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer's product.
Under the new FTC guidelines, this is exactly the type of "material connection" that must be revealed because knowledge of this poster's employment could likely affect the weight or credibility of her endorsement. Therefore, to comply with the new guidelines, the poster should clearly and conspicuously disclose her relationship (i.e., an employee) to the manufacturer so the readers of the message board would know they were communicating with a possible company representative.
This type of scenario can be applied to any on-line social media, including Facebook, MySpace, Twitter, blogs, and message boards, and can also apply to any type of product or service. No industry is exempt from these guidelines. Whether your business provides consulting, legal or financial services, or sells pharmaceuticals, software, gardening supplies, upholstery or mechanical parts, etc., if your employees are on-line discussing your products or services, the company could be liable if something goes wrong and the consumer claims to have been misled by the employee
posting(s).
What Should You Do?
- Employers should update or create social networking policies to address this new development.
- Decide how your organization wants to deal with the issue of on-line postings. There are many options. For example, do you want to permit them? Do you want to entirely prohibit on-line postings about the company's products and services? Or, perhaps, require some kind of formal advance approval by a company official?
- Educate employees about the legal impact of their on-line communications. If it's a big issue in your organization, you might want to consider an employee communication campaign. Also, this is where a written policy will help. If the employee blatantly ignores a written company directive, it might serve as a possible defense to one or more claims against the company. It will also provide a basis for employee discipline.
- Obtain a written acknowledgement of receipt of the written policy and place it in the employee's permanent personnel file.
Your Firm contact is ready to answer your questions concerning these new guidelines and is ready to assist you in developing a social networking policy that is both right for your organization and complies with these new guidelines.
For more information, call us today at (818) 508-3700,
or visit us on the web, at www.brgslaw.com.
Sincerely,
Richard S. Rosenberg
Partner
BRG&S, LLP
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