Look Before you Leap: An Analysis of Hidden Costs Associated with Internet Social Media Marketing




As with so many technological advances in the last 20 years, everyone is jumping at internet opportunities and no one wants to be left behind. This is particularly true of businesses, constantly innovating and fighting to stay ahead of competitors and in touch with all potential consumers at all times.

A quick search of recent media and business publications reveals countless articles telling companies not miss these important opportunities to take advantage of the "massive power" of these social networking sites for as little as $200. While these are understandably enticing opportunities for businesses trying to survive and even thrive in this tough economy, they should not be pursued blindly or at significant cost in other areas, such as litigation. Companies must be aware that a small $200 investment could cost them millions in litigation expenses if not properly monitored and managed.

Although there have been no major cases discussing this issue in relation to businesses in United States courts – yet – trends in e-discovery litigation and a recent Canadian appellate court decision present a strong argument that American courts will hold companies responsible for preserving the content of their social networking sites for litigation purposes and will not hesitate to penalize these businesses when they do not.

In Leduc v. Roman, 2009 CanLII 6838 (ON S.C.), the court stated that the content of Facebook and MySpace constitute constitutes "data and information in electronic form" producible as "documents" under the relevant provincial Rules of Civil Procedure governing the scope of document discovery. The court went on to state that "Facebook’s Terms of Use and Principles make it clear that a person’s postings fall under that party’s control or power since the account user may post or remove content."

In Leduc v. Roman, the plaintiff was ordered to preserve his Facebook postings and produce any of his Facebook postings that relate to any matter in issue in an action. Given the similarities between the court rules interpreted in Leduc and the court rules governing most jurisdictions of the United States, businesses should not be surprised when courts find that they are responsible for preserving and producing information from their social networking pages. Nor should businesses be surprised when they are sanctioned by courts for failing to do so.

In this world where both technology and litigation are becoming increasingly ubiquitous, large companies must work even harder to ensure that each division of the company is coordinating with the other divisions – as in this instance, marketing and in-house counsel or the company’s outside legal consultants – so that a true cost-benefit analysis can be performed before seemingly innocuous marketing efforts are pursued only to be followed by expensive litigations sanctions. Blindly beginning a social networking page without any consideration for the ongoing responsibilities associated with that endeavor, or the input of all relevant divisions of the business, puts a company at substantial risk for expensive litigation sanctions or even crippling judgments.

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