Risks of Social Media

Source: Partner's Report

With increasing use of LinkedIn, Facebook, Twitter, etc., accounting firms should understand why it is important to develop policies on use of these tools. Here are some highlights from an article on this subject.

Comments on legal risks:

• Social networking sites may provide more information about prospective employees than could be otherwise legally used.
• Social networks may unintentionally empower employees to communicate on behalf of the firm.
• Federal Trade Commission guidelines effective December 1, 2009:
  • Protects consumers from being misled into purchasing defective products based on employees' statements.
  • FTC would probably not act against companies for comments by a "rogue" employee, but has acted against companies that failed to "maintain appropriate internal procedures."
  • Enforcement actions could be brought if an employee comments on a company's services without disclosing the employment relationship.

What firms can do:

• Some organizations are banning use of social media despite the potential benefits. According to a survey by Robert Half Technology, 54 percent of U.S. companies have banned use of social networking sites by employees.
• The reasons for bans are more about employees' time than about legal risks.
• Some companies block social networking sites.
• Developing policies and procedures:
  • Create guidelines, procedures, and training programs for those who use these tools. Then use employees to "be the brand" through their use of social networking tools.
  • Guidelines can teach employees to take responsibility for what they write, identify themselves, and observe copyright and fair-use and financial-disclosure laws.

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From Partner's Report, The Monthly Update for CPA Firm Owners, Institute of Management and Administration, Inc., [email protected], March 2010, p. 4, "Social Media."