Foundry Law Group Blog

Businesses asking to “follow us on…” blurs the lines of social media and business assets

Many of us know that we should keep our private lives relatively separate from our work lives. However, this isn’t just a recommendation. It may very well serve as a precaution.

As social media’s prevalence grows, businesses have become more and more active online, leading to a host of various legal and business concerns. The obvious benefits of a social media presence can be found in the inherent advertisement that occurs in having accounts on social networks such as Facebook, Instagram, and Twitter. Via such online accounts, businesses are able to conveniently engage with the public, manage PR crises, and market new products and models – all at a very low cost for such virtually unlimited exposure.

This practice is so prevalent nowadays that it has become common-place to hear a boiler-plate repeat of “follow us on Facebook, Instagram, and Twitter” in advertisements. Businesses are essentially advertising their advertising tools in order to further promote their businesses.

However, with greater internet exposure comes greater transparency and room for err. Problems such as PR crises (Donald Trump, anyone?) have the tendency to spread like wildfire across the internet community before companies can even take action in response.

A business’ reputation isn’t the only thing on the line though. In a recent court case, it was ruled that business social media accounts constitute valid property interests for bankruptcy purposes, meaning that accounts created by former business owners becomes property of the new owner. Why? It’s rather simple really. Social media accounts have shown increasing business value. For example, having a following of thousands on Twitter or Instagram often translates to substantial financial gain. In particular, any rights to privacy over these accounts are waived because the business accounts are separate and independent of the individual’s own personal accounts. In re CTLI, LLC, 528 B.R. 359 (Bankr. S.D. Tex. 2015).

Furthermore, using your business social media account for personal use can harbor all kinds of potential lawsuit risks. Consider PhoneDog v. Kravitz, a 2012 lawsuit, where a company sued its former employee when he changed the Twitter name on his account, no longer affiliating himself to the company and thereby taking the 17,000 followers – and according to the company, lost value of $340,000, or about $2.50 per follower per month for eight months – with him. Though the suit was settled confidentially, the over-arching lesson is still visible for all to see. Social media matters. It has business and monetary value. The simplest way to protect yourself and your business? Keep your accounts separate. If your employer provides the account, ensure you and your employer are in agreement as to who ultimately owns that account to avoid what happened in PhoneDog v. Kravitz.

Beyond bankruptcy and lawsuits, from an owner or buyer’s perspective, transfers of social media can still be very sticky. Social media as a business asset is a relatively new concept and many social media sites restrict transfers through their Terms of Use or Service, making it difficult for companies to exchange owners so to speak. For example, Twitter prohibits the sale or purchase of usernames in its Terms as well as various other restrictions to a User’s account use. Facebook is a little more lenient, requiring that transfers of accounts are first subject to Facebook’s written permission (Section 4.9).

So while traditional assets can be transferred, purchased, and sold through asset agreements, social media assets can involve a more complicated process based on its relevant Terms. Sites also tend to protect against sensitive information being exchanged, such as login and security information, preventing an alternative take-over of the account. In particular, considering the nature of social media, such take-overs are inherently risky due to potential infringement, misuse, and abuse of the account.

As social media continues to grow in use and popularity, its business, advertising, and monetary value will likely also continue to grow and face substantial scrutiny in the following years. For now, keep your business and social media accounts separate and, even if it’s tiresome, read over the terms of use to understand what kind of activity you can and cannot do, especially in the context of your business and its assets.

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