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Compliance

4 Social Media Pitfalls to Avoid

The social media sphere offers great opportunities to market your store, but there are several legal traps inherent to this type of viral marketing. Compliance expert reviews four of them in this digital marketing primer.

September 2011, F&I and Showroom - Feature

by Jim Radogna

Dan Kilian and Kristina Reid of Meade Lexus in Southfield, Mich., are using social media to raise the dealership’s online profile. But they also have taken steps to remain compliant, adding links to any required disclosure statements.
Dan Kilian and Kristina Reid of Meade Lexus in Southfield, Mich., are using social media to raise the dealership’s online profile. But they also have taken steps to remain compliant, adding links to any required disclosure statements.

It was bound to happen. The tremendous growth in digital and social media marketing was simply too difficult for government regulators to ignore. That’s why social media ethics are no longer based solely on personal preference. It’s now a matter of law.

Take the Federal Trade Commission’s truth in advertising laws, which hadn’t been updated since 1980. But because of the boom in online marketing activities, the FTC is now actively updating its rules. The agency’s position, which is shared by state regulators, is that social media is not a loophole for deceptive marketing practices. Regulators are actively enforcing rules and cracking down, so let’s review four key areas your dealership can’t afford to ignore.

1. Faking Reviews

The FTC has updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising to require that companies ensure their online posts are completely accurate and not misleading. Planting or allowing fake reviews to be posted is a violation.

Keep in mind that the guidelines are extremely broad and can apply to anyone writing reviews on rating sites such as Google Reviews, or promoting products via social media sites, including blogs. For dealers, companies which promise to improve your ratings on review sites should be viewed with skepticism.

Last October, a BMW dealership in San Antonio suffered serious damage to its reputation after it was caught posting fake online reviews. The culprit was a company the dealership hired to contact customers to generate actual reviews. After clicking on a suspicious reviewer’s profile, a customer discovered that the author had written five-star reviews for numerous dealerships and other businesses, and not just in San Antonio. Even worse, all those reviews were posted on the same day.

This is happening every day, folks, so be wary of the companies you hire to help you with your digital marketing efforts. And don’t forget your own staff. The FTC recently charged a California marketing company with deceptive advertising after it found employees were posing as ordinary consumers and posting positive reviews.

Dealers may face liability if employees use social media to comment on their employer’s services or products without disclosing their relationship with the business. Remember, the FTC requires all “material connections” between a poster and the companies they review to be disclosed. That extends to any association that could affect the reviewer’s credibility.

So, if employees, friends, family or vendors post reviews to prop up a dealership’s online reputation, they must clearly disclose their relationship with the company. Additionally, the reviews themselves must be an honest opinion based on a real experience. The FTC’s rules stipulate that reviewers must never endorse a product or service that they have not used personally. Remember, it’s all about transparency and full disclosure.

Failing to follow those guidelines puts more than your reputation at risk. It also can result in substantial penalties. In 2009, then-New York Attorney General Andrew Cuomo fined a cosmetic surgery practice $300,000 for ordering its employees to write fake reviews for its facelift procedure. Last March, the FTC ordered a company marketing instructional DVDs to pay $250,000 for fake reviews posted by the company’s affiliate marketers.

The FTC also has indicated that companies are fully responsible and liable for any inappropriate actions committed by their employees, vendors and any advocates they recruit. The reviewers themselves also may be held personally liable for statements made in the course of their endorsements.

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