Social Media Marketing has changed how companies large and small market themselves online. The benefits of establishing a presence on various social media platforms are numerous. A recent study by Social Media Examiner found marketers surveyed reported the following benefits of social media marketing.

As much as the benefits of Social Media Marketing are touted, this exposure does not come without risk. Business owners should be aware of the many risks involved with a social media presence. Not only is a brand’s reputation at risk, but companies open themselves up to legal risk as well. Let’s take a look at some of the risks associated with this necessary marketing strategy.

Any company utilizing social media marketing needs to have a plan in place to ensure their compliance with local and federal laws. Assessment of current exposure and risk coupled with a plan for compliance going forward are two necessary steps every business should take. Every business owner needs to be aware of the risk and ensure employees have proper training and education on how to conduct themselves online as they represent the brand.

Businesses should be familiar with the multitude of laws surrounding sweepstakes and contests. If done improperly and viewed as a lottery, a simple contest or sweepstakes can land a company in severe legal trouble. Companies need to be aware of the legalities surrounding contests and sweepstakes and know what constitutes a lottery in the eyes of the law.

Testimonials may be a great way for companies to gain the trust and loyalty of customers, but they also must be compliant with laws and should not be obtained falsely. Falsely advertising your company online can result in severe legal ramifications.

In addition to the legal implications associated with an active social media presence, companies have their reputation at risk. Unhappy customers leaving feedback, hashtag hijacking, use of profanity, and exposure of perceived negative corporate practices are all examples of brand reputation damages that companies have incurred in recent years on social media. Here are a few examples:

• Pizza Hut in Southern California left its comments open thuslyallowing users to post profanity on their Facebook page overnight. This could have been entirely avoided with a few simple steps. Their second mistake was that the company was not actively monitoring the site, which prevented removal of the comments in a timely manner, exposing more customers to the profanity. (Socialmediatoday link)

• Protesters took the fight online against Versace in 2011 in an effort to expose the company’s use of dangerous manufacturing practices. Versace had to revoke posting rights to its Facebook page after their wall was covered with brand damaging comments. (Mashable link)

• Fast food giant McDonald’s suffered a huge blow when their Twitter hashtag campaign #McDStories was used to convey negative experiences customers had at the chain. (Aol Money link)

As you can see, risks associated with social media are numerous and businesses should be aware of the consequences. With this in mind, business owners trying to grow their customer base still need this invaluable marketing tool in their online marketing arsenal.

Fortunately, there are steps that can be taken to assess a company’s risk, reduce liability and ensure legal compliance. If you would like to learn more, or speak with an expert regarding your company’s exposure, Contact Us. For independent consultants and attorneys interested in becoming a certified socially legal auditor (SLA), Click Here to learn about our upcoming Atlanta training session.