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Does Your Social Media Policy REALLY Protect Your Dealership? (You DO Have One, Right?)

Chances are, since you’re reading this post, your dealership or company is involved in social media. That’s good - it’s hard to imagine how difficult it will be moving forward for organizations that have not embraced social networking. Although Social Media is relatively new (and certainly exciting), its meteoric growth has unfortunately caught the early attention of the legal powers-that-be.

Despite the widespread use and misuse of social networking at work, 45 percent of all businesses still do not have a social media policy. Many of the policies that companies are using do not adequately address potential legal issues. Regulators have been bringing complaints against companies arising from their social media activity, thus, highlighting the need for companies to demonstrate that they are exercising due diligence to promote legal and ethical conduct in the context of social media activity.

Not surprisingly, plaintiff’s attorneys have also jumped on the bandwagon. Companies are being sued regularly by employees and others based on social media use. Beyond legal risks, employees can harm a company’s reputation by disseminating controversial or inappropriate comments regarding the employer or its business activities.

There are a number of legal considerations that every company should be aware of when establishing their social media policies and procedures, such as social media use in employment decisions; posting of online reviews, testimonials and endorsements; ‘fake’ and paid-for reviews; advertising on social media; potential overtime claims; harassment, discrimination and defamation claims; copyright and privacy issues.

It's more important than ever to craft a policy that's both practical and legally defensible. You can protect yourself by insisting that participants in your social media programs comply with the law and training them how to do it. The Federal Trade Commission specifically says these steps may limit potential liability and will be considered in any prosecution. According to FTC guidelines, “The Commission agrees that the establishment of appropriate procedures would warrant consideration in its decision as to whether law enforcement action would be an appropriate use of agency resources. The Commission 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 policy that adequately covered the conduct in question.”

So, if you have a social media policy in place, it may be time to dust it off and re-evaluate it. If you don’t have a policy, it’s time to get started.

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Comment by Jim Radogna on July 27, 2011 at 11:18pm

I agree that PolicyTool is a quick and easy way to put together a social media policy (I did it myself in a few minutes) and it does produce a nice policy. However, there are some potential legal issues that are not addressed by PolicyTool. For instance:


  • Social Media use in employment decisions
  • Posting of online reviews, testimonials and endorsements
  • Paying for reviews and endorsements
  • Advertising on social media  
  • Potential overtime claims
  • Harassment, discrimination and defamation claims
  • Invasion of privacy claims
  • National Labor Relations Act issues
  • CAN-SPAM Act (Yep, a U.S. District Court ruled in March 2011 that the federal CAN-SPAM Act applies beyond traditional e-mail messages, including messages sent by commercial social networking sites)
  • Fair Credit Reporting Act issues
  • Potential liability from vendors acts
  • Document retention policies
  • and so on...


A good social media policy should be tied in with existing policies such as employment, anti-harassment, professional conduct, protecting trade secrets, codes of ethics or behavioral guidelines, etc.


The FTC, NLRB, state agencies and courts are all over social media legal issues and a number of companies have already been hit with six-figure settlements. This is just the tip of the iceberg - it will only get worse.


I've done a ton of research on this topic over the last several months and I strongly believe that this is not an area where shortcuts should be taken.

Comment by Ralph Paglia on July 27, 2011 at 10:30pm

PolicyTool is a policy generator that simplifies the process of creating guidelines that respect the rights of your employees while protecting your brand online.*

It's easy. The streamlined process simply requires you to answer a brief questionnaire and provides you with a complete Social Media Policy customized to your company.

PolicyTool has been developed by rtraction in collaboration with Harrison Pensa lawyer David R. Canton, one of Canada's leading authorities in internet and technology related legal issues.

Comment by Ralph Paglia on July 27, 2011 at 10:14pm
I've helped dealers handle Employee Social Media Policy creation in a number of different ways and have had an article with links to over 100 corporate social media policy examples published by Social Media Today...  So far, the best and easiest, plus lowest cost IMMEDIATE solution to creating an effective social media policy for dealers takes only 5 minutes and it is free.  Simply answer 12 questions while using the application at (which was built by law school professors).  When you answer these 12 questions, the tool generates an editable Word document.  The doc created is amongst the best dealership social media policy documents I have ever seen.

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