The prevalence of social media and its use by businesses to market their products and services, as well as engage with their customers and the wider public, has presented a number of risks to businesses and their employees.

Further, more than any other time in history, the ethical or unethical conduct of a business or its employees is open to swift and broad public dissemination and scrutiny through the use of social media mediums.

The most recent data indicates that as at 2018, 79% of Australians are on social media, and 47% of small businesses, 49% of medium businesses, and 60% of large businesses have a social media presence.[1]

The prevalence of social media use by businesses and their employees has resulted in a number of impacts for the professional indemnity (PI) sector including:

  • There are increased risks facing Australian businesses through the use of social media that could result in a claim which could or should fall under a PI policy.
  • Australian businesses are well advised to, and increasingly expected to, devise and implement social media policies for their business accounts as well as employees, and the failure to do so can result in claims and liability.
  • There is an increasing trend that statements or comments by senior professionals or employees are taken by the public or customers to be relevant to the employer and not considered as a wholly personal matter.
  • Australian businesses and their employees are increasingly held to account by the public for their behaviour on social media platforms.

Rising risks

Many of the risks that are presented by social media are not particularly new as a concept, rather, the fact that information can be disseminated through social media or other technological means is increasing the risk or slightly changing the way that it manifests. Some key risks include:

  • Breaches of consumer protection legislation such as the Competition and Consumer Act 2010 and the Australian Consumer Law by making false or misleading representations about products or services. An example of this is ACCC v Allergy Pathway Pty Limited[2] where a company and its sole director were held responsible in relation to the publishing of misleading and deceptive statements on the company's Facebook and Twitter pages.
  • Breach of confidence or privacy law through the inadvertent publishing of material or confidential information on a social media account (whether the business' account, or a private account created by someone with access to the business' records).
  • Employment related claims such as discrimination, harassment or unfair dismissal arising from employees' use of social media. The recent controversy surrounding Cricket Australia's decision to dismiss an employee because of a private Twitter post has highlighted the difficulties associated with monitoring and policing employee social media use, as well as the speed at which the wider public can scrutinize a business' decision in the public domain.
  • Liabilities that arise from a business' failure to moderate and remove consumer created content that is posted on their social media pages, which could include, for example, a breach of an applicable code of ethics.[3]
  • Copyright infringement by the reposting or sharing of content that is the subject of copyright.
  • Defamation risks.
  • Reputational risks associated with the swift and broad dissemination of product or service failures and allegedly unethical behaviour.

It should also be noted that as material that is published online is typically available throughout the world, this could in certain circumstances expose the business to claims or suits in jurisdictions outside of where its key business operations.

For example, in Dow Jones v Gutnick[4] a US based publisher was sued for defamation in the Courts of Victoria. Part of the reasoning that supported the establishment of jurisdiction within Australia was that the allegedly defamatory content has been downloaded in Victoria where Gutnick has a local reputation.

Key takeaway

For those frequently using social media for personal and professional purposes, it is important to be aware of the increased risks associated with the use of social media, and how that might potentially result in claims against the business or the professional personally.

In such instances, senior professionals are encouraged to discuss the breadth of the cover available under their PI insurance policy with their insurer and/or insurance broker, to ensure that adequate cover is available for claims arising from social media use.