Startups: Nine Steps to Instituting A Policy For Social Media, Data Collection, And Other Online And Mobile Activities

By Louis Lehot, business lawyer and partner at Foley & Lardner LLP in Silicon Valley, and formerly the founder of L2 Counsel, P.C.

In today’s interconnected world, where opinions are formed in nano-seconds, companies vastly underestimate the damage that social media and other applications can have on their daily business. To protect and manage their brand and online reputation, it is essential that companies implement effective and comprehensive social media and data collection policies. This article outlines nine steps startups should take to institute effective policies for social media and other online activities.

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1. Train employees to never mention prospective or ongoing funding needs or rounds in social media posts.

Due to the sensitive nature of the fundraising process, compliance with securities laws and confidentiality agreements, your employees should be trained not to comment or engage in any sort of discussion regarding funding requirements or pending rounds of financing on social media or any other platform. Such comments could precipitate a negative effect on the company’s ability to raise funds and to the loss of trust with regulators and current and future investors.

2. Create and implement a custom-designed website privacy policy that fits your business and create a strategy to ensure that the company adheres to it.

While privacy policies can vary in substance, their principal and primary functions remain the same. Companies should ensure that the policy they use is tailored to their particular business model and operation. Further, each company needs to ensure that they have instituted and are implementing strategies that will ensure that each employee, officer, and director is following and adhering to that privacy policy. Breaches of policies result in litigation and other issues later on in the company’s life.

3. Create a custom-designed terms of use agreement that fits your business for the company’s website.

A terms of use agreement is essential for the operation of a company’s website. It dictates how people will interact with the website and ensures that the company will be protected from any infringing use of its website. A terms of use agreement will need to be tailored to fit the company’s operations and the function of its website.

4. Secure the company’s ownership of its website and other online assets.

To secure the company’s rights in its website and other assets, the company must effectively implement various IP protection strategies. You should engage with specialized IP counsel to determine what the best plan or approach would be for your particular company’s needs.

5. Survey and solve for the legal issues surrounding early-stage e-commerce.

If a startup is an e-commerce company, then there will also likely be a multitude of legal matters that the company needs to address before moving forward. As with most legal questions that arise during the operation of a company, it is best to consult a lawyer when these legal issues arise.

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6. Become familiar with laws regarding endorsements, contests, and promotions.

To promote their websites and products, many companies will offer different contests, sales, or other endorsements. Various laws govern these types of promotions, and legal questions will undoubtedly arise during the website’s life cycle. As with most legal questions that arise during the operation of a company, it is best to consult a lawyer when these legal issues arise.

7. Ensure that employees understand that they must consult legal counsel before posting about material aspects of the business (for example, pending litigation or new product development) on social media.

Companies often have their employees make postings to their various social media accounts to bring attention to the company’s products or upcoming promotions. All employees must understand the consequences of posting any company-related materials to their social media accounts. Therefore, a company must use its best efforts to ensure that all of its employees consult with legal counsel before making any postings. This is easily performed if the company has in-house legal counsel.

8. Pay close attention to privacy and data security laws governing the collection, use, security, transfer, and disposal of the personal information of employees and customers that is collected and maintained by or for the company.

Many companies face issues when it comes to their data collection policies. Often, companies mistakenly neglect to remain abreast of privacy laws, which results in their policies becoming outdated. Even the most carefully crafted policies will fail if not updated. Companies need to make sure that they’re always current on the ever-shifting landscape of privacy and data security laws wherever their company is located or does business.

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9. Do not assume that the casual nature of social media and other online and mobile applications means that these activities cannot cause significant harm.

Above all else, it’s best to use common sense! Make sure that you use good business judgment when engaging with social media platforms. If there are any doubts as to whether or not a post could cause harm to your business, it’s best to err on the side of caution. If there are any questions that you have about a post or a potential social media strategy, it would be best to consult a lawyer before doing so.

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