Copyright infringement can result in big lawsuits, but it isn’t the only kind of advertising injury a business has to worry about. If you advertise false things about your competition – or your products – you might end up in a legal mess just as easily.
Considering the impact of social media, it’s more important than ever that tech businesses be aware of this risk and how to avoid it.
Tech Businesses: Be Careful What You Say About Others
Daliah Saper of
(@SaperLaw) says a business owner can incur liability if they advertise an unfair, deceptive, or non-truthful statement regarding another’s business or products.
But there are two other things that must happen for a statement to be considered an injury:
- It has to have caused harm to another’s personal or professional reputation.
- It has to have been communicated (via oral, written, or visual communication) to a third party.
If you’re a cybersecurity consultant and you write a (false) post on your website about how a competitor intentionally installs malicious viruses on his clients’ machines, the competitor can sue you if he loses business because of it. You’re liable for that advertising injury and the costs associated with it.
Another thing to consider: although the Federal Trade Commission normally can’t intervene in an individual dispute between two companies, it could get involved if…
- An ad is unfair or deceptive AND
- Intervention is in the public’s interest.
This, Saper admits, “is a rather broad authority to act.” If the FTC does get involved, it could impose fines or penalties, court-ordered corrective advertising, disclosures, or other remedies at the offender’s expense.
“To stay on the right track, make sure any mention of a competitor’s business or product is not false or deceptive, and that you have evidence to back up your claims,” Saper says. In other words, don’t talk smack – but if you do, be able to back it up.
Avoid Advertising Injury Exposure: Pay Attention to Your Social Media Channels
A false statement doesn’t have to be made in traditional advertising in order to cause trouble. Increasingly, social media is where all the advertising injury action is. If you’re a business owner…
- Keep a tab on your company’s social media accounts.
- Ensure your employees are educated on how advertising injury works.
You don’t want to wake up one morning and find that your company posted a slanderous statement the night before. Even a little thing can quickly get out of hand on the Internet.
You might ask, “What if other people are posting on my company pages?” That’s a great question!
Saper says as long as your business page is merely a platform, and “there is no connection or inducement by the business for the negative post by the user,” then the business should not be liable.
Still, it’s a good idea to present a positive face online and moderate when appropriate. Trim the online hedges, as it were, so they don’t get unruly.
Manage Advertising Injury Exposure: Be Careful What You Say About Your Products
If you’re unfair or deceptive to your customers, you might face an advertising injury claim, too. What would this look like?
Saper cites the FTC’s regulations, which state that…
- An ad or business practice is unfair if it causes consumer injury that can’t be avoided or outweighed by the consumer benefit.
- An ad is deceptive if it misleads consumers in a material way (i.e., it’s important to a consumer’s decision to purchase the product or do business with the company).
These definitions are, out of necessity, vague. It boils down to being aware of how you’re advertising yourself, your products, and / or your services. Don’t dupe customers into thinking they’re getting something that they’re not; otherwise you risk a General Liability Insurance claim.
As for other consequences: “In general, the ads that receive the most attention from the FTC are those that make claims regarding health or safety (i.e., Product X has been linked to melanoma),” Saper says, “and those that claim facts or statistics consumers would have trouble evaluating for themselves (i.e. 75 percent of users saw an increase in energy savings after using Product X).”
The takeaway of the day: back up what you say. Saper recommends checking out the FTC’s FAQs for small businesses for more information.
Advertising Injury Insurance Can Cover You if Sued
If something you say or advertise ends up insulting or deceiving someone and they decide to sue, you might be covered by advertising injury insurance. This coverage is typically included in a business General Liability Insurance policy, and it can help pay for your legal defense and other costs associated with the claim.
That applies if it’s something on your own business’s end. For a lawsuit over work done for a client’s website or web property, the matter may be a case for your Errors and Omissions Insurance.