What are the liabilities governing blogs and other social media vehicles? Does the risk mean you should prohibit blogging by corporate officers?

With the rise of blogs, Twitter, Facebook and other forms of social media, communications professionals have a wide range of options to connect with audiences. These extend beyond that of delivering a speech in an auditorium or sending an e-mail or press release to a distribution list.

Web 2.0 makes it easy to reach a worldwide audience, but the heady possibilities come with potential liabilities. Any errors in communication will be amplified. This is why many companies find the concept of social media pretty scary.

Allowing employees to blog, tweet or post Facebook updates is obviously more risky than not permitting anything outside the standard channels. Especially if those employees are C-Level executives or the CEO, where regulations exist which govern the disclosure of information by publicly traded companies.

When Web 2.0 rubs up against the staid world of investor relations, finance and legal departments there will inevitably be some friction. But rather than implement a blanket prohibition against any and all communication of corporate information, we need to be aware of the regulations and plan accordingly.

The surprising fact is, social media are often more congruent with regulations than not. Consider the Securities and Commission (SEC) and their Regulation Fair Disclosure (Reg FD).

Reg FD — now a blog friendly regulation

Reg FD prohibits the selective disclosure of “material information” by senior executives. This means communications must be available to all interested parties (such as investors) and not limited to specific sub-groups (such as favored analysts). In August 2008, as a result of a dialog between Sun Microsystems CEO Jonathan Schwartz and SEC Chairman Christopher Cox, the SEC approved the use of Web sites and blogs as compliant with Reg FD.

This means that a company that maintains an up-to-date, freely accessible Web site which is a “recognized channel of distribution” can post updates on a blog without requiring safe harbor statements or other restrictions.

Blogs of publicly traded companies are probably more accessible to the general public than traditional channels of communication such as BusinessWire and PR Newswire. The new ruling could disintermediate them.

There is, however, a challenge for companies with inactive, out-of-date Web sites. It might be argued that posting important information to a moribund blog makes the disclosure ‘selective’. The moral is: blog frequently and make it easy for people to subscribe to your RSS feed.

Avoid anonymous postings

In the world of social media, commonsense rules still apply. It’s not wise to make hidden or anonymous attempts to influence the public perception of your company in any forum. The same considerations apply with online content. Michael Sebastian covered this topic on Ragan.com in December 2008. Attorney Bruce Johnson’s advice was to avoid false advertising or the use of fake identities or anonymous postings by executives.

Prepare for curbs in online advertising

The Federal Trade Commission (FTC) is reviewing new guidelines for bloggers and social networking site users who advertise or engage in ‘viral marketing’ for a company’s products. The Financial Times reported on April 2 that giving free samples to bloggers and people who tweet favorably about your product might be curtailed:

If a blogger received a free sample of skin lotion and then incorrectly claimed the product cured eczema, the FTC could sue the company for making false or unsubstantiated statements. The blogger could be sued for making false representations.

It’s a small world

Since social media are available on the World Wide Web, you need to be aware of regulations outside the United States. European Union (EU) regulations apply to companies doing business in the EU. The Unfair Commercial Practices Directive guards against false representation. EU privacy rules also impact the collection of personal information and email addresses on your website.

Always check with your attorney

This article does not constitute legal advice. I am not an attorney, nor do I play one on TV. Your responsibility is to develop a sound social media policy which is then approved by your legal department. It’s beyond the scope of this article to review all aspects of such a policy. I recommend taking a look at chapter six of Joel Postman begin_of_the_skype_highlighting     end_of_the_skype_highlighting’s new book SocialCorp: Social Media Goes Corporatewhich includes sample social media agreements and policies which can be adapted for use in your company.

With a little courage and a lot of common sense you should find the rewards of fully engaging with social media outweigh the risks.

(This article was originally published on ragan.com)