A fi nancial services company that is already leveraging social media groups for its advantage is American Express (AMEX). For the past three holiday seasons, AMEX has successfully used a Facebook group to promote “Small Business Saturday,” which occurs the Saturday after Thanksgiving. This Facebook group, which is the core of the marketing efforts for this
initiative, encourages followers to use their AMEX cards at a list of participating local small businesses. In exchange for patronizing these businesses, the individual is given a $25 credit on his or her credit card statement. 44 In 2011, more than 2.6 million consumers participated in the group on Facebook, which represented an increase in participation of over 73 percent.
consumers spent $5.5 billion on Small Business Saturday, which surpassed the pre-holiday estimate of $5.3 billion. 46 Furthermore, small business owners could participate by joining the “American Express OPEN” group and gaining access to a small business toolkit. 47 AMEX’s program is a helpful example because it demonstrates that satisfying consumers’
Soscial needs such as mobilizing followers
to shop locally for friends and family with the added incentive of a discount, can lead to the satisfaction of the business’s needs, namely more people using their credit cards while making in-roads into the small business community. Other examples of successful community-building activities include Ameriprise, which has launched an investment adviser
search tool through LinkedIn, and both E*TRADE and optionsXpress, which have launched their own social communities for investors to share tips and strategies. 48 Many professionals worry about the potential for negative conversation streams about their fi rms. It is important to accept that negative chatter on the internet about a fi rm is always going to exist, whether
or not that fi rm has an online presence. Having an active online presence through social media, however,allows the fi rm to become a part of the conversation stream, giving it an opportunity to minimize any negativity, clarify the situation, and respond directly to any concerns. Regulatory Concerns. Social media groups and communities can be powerful tools
For mobilizing large groups of people
but they also raise particular risks under the securities laws for the financial services industry. One such risk relates to third-party posts on a financial firm’s social media profile or group page. If the firm is a registered broker-dealer, FINRA’s position is that posts by third parties are not considered communications by the firm and therefore do not trigger the prior principal
approval, content, and filing requirements. 49 However, a third-party post may become attributable to a registered broker-dealer if the firm has (1) “involved itself in the preparation of the third-party’s content” (known as “entanglement”) or (2) “explicitly or implicitly endorsed or approved the content” (known as “adoption”). 50 For instance, a registered broker-dealer
should not pay a third party to write on its Facebook wall or retweet a message from a third party whose content may run afoul of other FINRA requirements, such as suitability. According to FINRA, it is a best practice among the brokerdealer industry to establish appropriate usage and screening guidelines for third parties that are allowed to post on the dealer’s social media platforms. 51 Registered broker-dealers also need to ensure that any links shared via their
Social media platforms do not connect to websites
that the broker-dealer knows or has a reason to know contains false or misleading information. 52 In the SEC Alert, the agency did not take a clear position on third-party posts; instead, they left it to the discretion of the firm to determine what types of posts are permissible. 53 Potential Liability for Third-Party Statements. The shortcomings of the FINRA
and SEC guidance are revealed when one considers using social media for purposes beyond branding and advertising. If a fi rm actively wants to create a community and have engaged discussion, it must participate in that discussion, or in some other way promote it (by the creation of a hashtag for instance). If a fi rm creates a hashtag, does every post following that
creation become a post “adopted” by or “entangled” with the fi rm? It is unclear from existing guidance, but we believe the better view is that they do not. This is because users of social media innately understand that they can take content that is available and repurpose it for their own ends, and the typical social media user would not mistake a comment by a third
Conclusion
party as a statement by the fi rm itself. However, fi rms still must be careful not to retweet or “like” particular posts if they are not comfortable having liability for those statements, and thus we believe that fi rms that use social media to create and mobilize communities need to spend considerable time generating guidelines for when retweets and likes are permissible, and perhaps even require some preor post-approval for such actions. Firms should also be
aware that they may delete lewd, defamatory, or otherwise inappropriate third-party posts pursuant to Section 230 of the Communications Decency Act, and should be prepared to monitor and delete such posts if they are using social media as a way to form or mobilize a community. 54 This 1996 statue “immunizes social media and other websites from liability for content published by their users, provided that the site owners are ‘not responsible in whole
or in part, for the creation or development of’ the offending content.” 55 However, a firm should not view this statute as giving it a right to delete all posts that are negative. Indeed, deleting all negative posts could become a problem under the guidance issued by the FTC, which may be applicable to certain activities by financial services firms. The FTC’s mandate is to protect consumers from “deceptive and unfair acts or practices” and only removing
negative posts from a firm’s social media streams may be construed as such an act since it could potentially misleadconsumers. 56 In addition, firms that use social media to form or mobilize groups or communities may be tempted to have employees post favorably about the company on those pages. This temptation must be avoided: The FTC has brought charges for deceptive advertising against companies that posted such reviews without disclosing that the
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