I shared social media business (and legal) etiquette tips as a panelist at a seminar offered at a JA New York jewelry industry trade event. The seminar moderator, Ashley Davis, an Associate Editor at National Jeweler, eloquently described the environment for companies building an online presence:

Social media is a new frontier for businesses, one that is essential to survival in the tough retail market, but it’s also an arena without established mores to guide proper behavior.

Here is a summary of my response to Davis’ question about ground rules for a company’s online presence. Since seminar attendees consisted primarily of retail, manufacturing and design professionals from the jewelry, my remarks focused on the jewelry industry. However, the guidelines for appropriate social media conduct apply to many industries.

You want to make sure that your online activities are legal and are not violating anyone’s rights Some of the subject areas for potential pitfalls include violating someone’s copyright, trademark, and publicity rights; and offering a promotion that violates the law. Here are a few examples of social media activities likely to land you in legal trouble.

Undisclosed Endorsements

Paying people who are influential in the jewelry industry to post pictures of themselves to social media wearing your designs without disclosing their relationship to you is illegal and can result in a contact from the Federal Trade Commission (FTC) inquiring about your failure to comply with its Guidelines concerning endorsements and testimonials.

For the same reason, running a promotion where you promise customers a 15% discount on their next purchase if they bring in a screen shot of their positive Yelp review of your store – can yield an inquiry from the FTC if the incentive for that positive review is not disclosed.

(Inaccurate) Implied Celebrity Endorsements

Let’s say Angelina Jolie or Meryl Streep or [you fill in the celebrity] visits your store and makes a purchase, you take a picture of Angelina or Meryl and post it to Twitter or Facebook with the caption “Look who’s shopping at our store” without the permission of the celebrity. That has the potential of generating a lawsuit claiming that you violated the celebrity’s publicity rights.

One high-profile 2014 example started with a paparazzi photo capturing actress Katherine Heigl leaving a New York Duane Reade drugstore and carrying bags from the store. Duane Reade posted the image online with the caption “Even @KatieHeigl can’t resist shopping #NYC’s favorite drugstore.” Heigl launched a lawsuit alleging violations of the federal Lanham Act as well as the New York civil rights statutes and seeking $6 Million in damages. Duane Reade and Heigl eventually settled.

Online Sweepstakes

You offer an online sweepstakes. Each time a customer makes a purchase at your online store, they are immediately entered into a random drawing for a complimentary day at the spa with all the treatments. If your sweepstakes does not offer a method to enter that does not require payment, it is not a sweepstakes. It is an illegal lottery because in exchange for a payment, the customer received an opportunity to win a prize where the winner of the prize is selected randomly. To change it back into a legal sweepstakes, you need to remove the required payment. You can usually accomplish that by offering a free method of entry.

In a recent blog posting, I deconstructed a real example of an illegal lottery masquerading as a legal sweepstakes and provided options for remedying the problem.

Promotional Videos with Infringing Music

You put together a short video promoting your store. To make the video more interesting, you rip a copy of your favorite song and pop it into your video as the soundtrack. As previously discussed on this blog, adding music to your company video can generate legal problems.

Suppose you post your promotional video online. If posted to YouTube, there are some YouTube specific reasons [i.e., YouTube’s Content ID System] why such posting might not be problematic. On other online platforms or when YouTube exceptions do not apply, a common scenario is the music copyright owner issuing a take-down request and removal of your video from the platform. A worst case scenario is the music copyright owner suing you for copyright infringement.