It used to be that if you wanted to build a small business into a big business you had to spend a lot of money. Mail campaigns, print advertising, radio and television spots had to be purchased in a wide range of markets to get the word out about your product or service.
Times have changed, and the Internet is king. Any small business can grow significantly by using social media, and a lot of it is free! Twitter, Facebook, Youtube and many other sites allow anyone to talk about anything, anywhere, at any time, and it won’t cost you a nickel.
Or will it?
In this society of free speech and one-on-one customer engagement through free or low-cost social media, the pitfalls are many and they can cost you if you aren’t careful. Saying the wrong thing can result in everything from customer backlash to corporate lawsuit. In the digital age even the things you delete can live on forever through website caching and screen shots. Read on to find out how to protect your business.
What Does Your Liability Insurance Policy Cover?
Most businesses purchase Commercial General Liability Insurance to cover things like slips and falls or products liability, and those policies usually include coverage for personal and advertising injury.
Personal or advertising injury may include using copyrighted photos without proper licensing or permission, slandering a customer or a competitor, or advertising the wrong price or details on an item. So what happens if you make a mistake in an online Facebook status, or offend someone on Twitter?
Generally the advertising injury portion of your policy will defend your company in suits of this nature, but there are some caveats. The amount of coverage is limited in the policy declarations, and coverage is subject to the following exclusions:
- Knowing violation of the rights of another. Did you know that this was going to violate someone else’s rights and possibly cause personal or advertising injury? No coverage.
- Material published with knowledge of falsity. If you knew the information was false and published it anyway, there is no coverage. Publications that are satirical in nature should be clearly marked as such, but are not necessarily subject to coverage if they cause personal or advertising injury.
- Quality of goods – failure to conform to statements. If you say on social media or your website that your product or service does “xyz” then it had better do “xyz”. There is no coverage for you if it doesn’t. Case in point: A well-known restaurant is being sued over claims their products are GMO-free, even though they aren’t.
- Wrong description of prices. If you advertise a price and you try to sell for a different price, any ensuing lawsuit will not be defended by your policy.
- Infringement of copyright, patent, trademark or trade secret. If you use someone else’s patented or copyrighted information or photos, or intellectual property (which can include personal photos, blog posts, or social media) there is no coverage.
Personal and advertising injury coverage is not necessarily a standard coverage. Your policy may not include it, and if it does, the coverage may be manuscript. Call your broker to discuss your policy coverage.
Mitigate Social Media Blunders
Social media is a great way to engage customers in real time on a large scale. However, that large scale can blow small mistakes out of proportion. Here are a few tips to keep small social media problems from turning into big ones:
Establish a social media policy. Samples (like this one) can be found on the web and adapted to your business. Make sure everyone in your organization knows and understands this policy.
Develop a social media plan. Planning what your message will be ahead of time allows for mistakes to be discovered and corrected. Plans should be reviewed periodically for relevance.
Create a social media team. Many companies hire a social media expert to handle their online communications, but one person can be a lawsuit waiting to happen. Involving department heads, human resources and upper management in social media posts and planning can help to eliminate mistakes and possible advertising injury claims. All social media accounts should be monitored by someone not directly involved in creating them.
Hire the right person. Your social media guru should understand and appreciate the core values of your company and be willing to communicate these to your customers and potential customers. Check his or her personal social media accounts. If your guru is sloppy or inflammatory on his personal accounts, he probably won’t treat yours much better.
Research and review content. Have the photos you are using been properly licensed? Do you have permission to share that content? Is the message you are sending consistent with your company values?
Talk to your insurance broker. Commercial General Liability Insurance is just one piece of the insurance puzzle. Depending on your business and the type of things you will be posting on social media, other coverage like media liability, cyber liability and even employment practices liability may be needed.
Free advertising isn’t always free, and could end up costing you more than you imagined. With the right tools and insurance in place social media can be the business booster you need.