Social media provides a flexible platform for companies and sellers to constantly connect with consumers and has revolutionized the direct selling industry around the globe. The goals in employing social media for direct selling are: to remain relevant, to convert passive responses into active engagement, and to drive brand recognition and loyalty. However, there are legal risks associated with selling via social media. Ally Law member firm Russell Kennedy, based in eastern Australia, is publishing a series describing these legal risks and how to manage them.
Current controversies or litigation in the following areas highlight legal risks in the direct selling industry:
- There is a temptation to elevate a passionate enthusiasm for a product or service to a representation which creates a false or misleading impression about its qualities, benefits or use; even silence or non-disclosure of a material matter can be deemed misleading.
- The fast-paced and informal dialogue in social media between a seller and a consumer facilitates the potential to compromise consumers’ legal entitlements and protections.
- Social media is an evolving area of defamation case law; you can defame a person where a publication, through words or pictures, damages their reputation or causes others to think less of them. The specifics of defaming a business versus an individual, and direct versus re-posting defamatory statements, vary by jurisdiction.
- Social media enables consumer grievances to be aired, potentially to the world, with the click of the mouse, which can seriously damage a company’s reputation. Similarly, claims or litigation which would have attracted local or industry specific media coverage now have the potential to go viral.
- Products liability, intellectual property, and privacy issues also have unique and important considerations in social media sales situations.
As the social media environment continues to evolve, so too will the potential for new claims and legal risks and these risks may vary by country and jurisdiction. Consult with your Ally Law member firm to craft a social media policy for your business that avoids legal risks in the direct selling industry. Ally Law members have deep experience in social media and online business considerations; see our related Global Matters articles: Defamation By Any Other Name, Negative Online Business Reviews – What To Do?, and Combatting Product Diversion and Unauthorized Online Sales. For more information about Ally Law member firm services and outstanding lawyers, contact us at team@ally-law.com.
