Social media is a great way to build your business’s reputation. Interactivity between merchants and customers has helped many small shops become Internet darlings with strong sales. However, fostering social media on your website or participating in social media on another site carries risk.
The danger is Internet defamation.
What is Internet defamation?
Defamation occurs when someone publishes false statements of fact about your business—for example, claims that you use discriminatory hiring practices or dishonest customer dealings. Posting such statements on the Internet for anyone to see is libel when it meets certain elements.
Elements of defamation
- The person who published the statement was not the person defamed
- The statement is a false statement of fact
- The false statement was understood to be about the plaintiff
- The statement was designed to harm the plaintiff’s reputation
- If the plaintiff is a public figure, the plaintiff must also prove malice
Businesses with an online presence—especially sites that encourage comments or dialog—need to monitor what users post. A federal law (part of the Communications Decency Act) commonly known as Section 230 limits liability for interactive service providers by protecting web hosts from many defamation claims arising from third-party content.
Even so, businesses should manage user content because allowing offensive or inflammatory posts to remain can distract from your brand and drive away customers.
An employee who responds to baiting and defends the business in a heated exchange can unintentionally engage in Internet defamation, which can cost customers and may lead to legal exposure.
Insurance for Internet defamation
While Section 230 and the truth can reduce the risk of a successful defamation claim, insurers can still help manage remaining exposure. For an overview of libel and related coverage considerations, see Libel and Slander: Defamation, Legal Consequences & Insurance.
Some business insurance packages also address online risks. For information on policies designed for online businesses, see Internet Businessowners Policy (iBOP).
Then why closely watch third-party posts on your site? You want your site and blogs to promote your brand, not become the site of a “flame war.” Allowing offensive statements to stay on your site, even when written by third parties, is off-putting to potential clients and customers.
Talk to an agent to understand your coverage options and the best way to manage this risk for your business: talk to an agent.
Frequently Asked Questions
What is the difference between libel and slander?
Libel is written defamation and slander is spoken; both require false statements of fact that harm reputation.
Does Section 230 protect my business from all defamation claims?
Section 230 provides broad protection for hosts of third-party content but does not cover every situation, and it does not prevent reputational harm from remaining content.
Can an employee’s reply to a reviewer create liability?
Yes, an employee who knowingly posts false statements or repeats defamatory claims can increase legal risk for the business.
Will standard business insurance cover online defamation?
Some general liability or businessowner policies may include or be extended to cover defamation-related claims; check policy terms with your insurer.