Recently, ABC News was hit with a $1.2 billion defamation lawsuit by a meat processing company that accused the network of misleading viewers into believing that their product was unsafe. The company filed its complaint alleging ABC “knowingly” and “intentionally” published nearly 200 false, defamatory and disparaging statements in on-air and online reports, and in social media postings. They claim this ultimately destroyed their reputation by causing major consumer backlash which, subsequently, impacted revenue as several of their national customers publicly vowed to discontinue selling their product. The lost revenue (over $20 million monthly) forced the meat processing company to shut three of its four plants and eliminate more than 700 jobs.
Media organizations and their reporters are at high risk of defamation suits as their messages are broadcasted on national television or published in magazines disseminating information, whether true or false, to millions of people. Your company assumes the same risk when you implement Social Media use within the organization. Statements made by employees via blogs, posts, tweets or videos can be viewed by just as many as those made by newscasters or writers but in half the time. With your employees having instant access to their own “broadcast” or “cover page”, your company can easily be accused of defamation as 3rd parties interpret employee views as those supported by the company.
Reputational damage is at the core of these suits and can cause substantial financial losses to the individual, business or group against whom such claims are made. While buying proper insurance coverage is a good reactive tool, there is more that can be done, by staying proactive. Senior management must implement effective risk mitigation plans that include social media policies. Speak with employees about the legal liability associated with their activity and warn them of the consequences of the subject matter posted, tweeted or blogged.
Retaining services of an independent advisor can give senior management the transparency they need to mitigate these risks, ensure that your company has the proper coverage and that the claims, if there are any, are handled efficiently and effectively. All of these measure will protect your firm as well as lower your Total Cost of Risk (TCoR), thereby improving your bottom line.
If you would like to learn more about risk mitigation procedures, claims handling and other tools you can use, please feel free to contact our Managing Principal, Albert Sica at 732.395.4251 or at [email protected].
