4 October 2017 by and Dispute Resolution Alert

Social media and company reputation: Way out?

We exist in a new era of consumer activism: comments made by consumers, customers, former employees or just those with strong opinions about a company or a brand are commonplace on social media. Social media has enabled “consumer voice”, placing companies and brands on the defensive when exposed to negative publicity and criticism, which might have an impact on their reputation and brand equity. A study published in Forbes notes that businesses risk losing as many as 22% of customers when users find even one negative article when considering buying a company’s product.

Yet, brand reputation consists of various factors. A strong brand will endure criticism (and hopefully address any overt dissatisfaction). Since a consumer experience is subjective, no brand can get everything right, all the time. Long before the oracle power of social media, Henry Ford noted that “the two most important things in any company do not appear in its balance sheet: reputation and its people”. As such, it has become increasingly important for companies to monitor and effectively manage any reputational risk a social media presence triggers.

What’s the golden rule when faced with a social media challenge? Act promptly and respond to the comment. To the extent that the negative statements are factually inaccurate, are consistently and repeatedly published, unfairly threaten the company’s reputational capital, compromise employees or individuals, or fall outside one of a number of grounds of protected speech, companies may also consider the available legal remedies to remove such statements from social media platforms. These include, an action for defamation or an application for an interdict.

An interdict is a summary remedy in the form of a court order, which can be either prohibitory (ordering someone to refrain from doing something) or mandatory (ordering someone to do something). A company can approach a court to order an individual (if such individual is known and identifiable) or the service provider, in certain circumstances, to remove the controversial statements made or refrain from posting further harmful statements on their social media platform/s. A company would however, have to prove that the relief sought meets the requirements of an interdict.  The cases of McKenzie v Braithwaite 2015 (1) SA 270 (KZP) and RM V RB 2015 (1) SA 270 (KZP) make it clear, correctly, that courts will lean towards freedom of speech, and are unlikely to grant a blanket interdict preventing defamatory statements that could be made in future.

An individual might have greater prospects of success instituting a claim for defamatory posts, but prospects of success for a company in such a claim are more limited simply because the comments may very well be discounted as opinions or bad reviews.

Recently, a Facebook user posted statements and photographs, claiming that a cleaning service company based in Durban, was illegally dumping in a nature reserve. The post attracted disapprobation and a further call to make the post viral allegedly led to the cleaning service losing two major contracts, estimated at R355,000 and led to the harassment of workers. No litigation, however, appears to have ensued. Generally, the majority of similar defamation cases play out in much the same way: either overtaken by the flow of newer social media posts or settled between the parties.

Whether it be an account security breach resulting in the release of information, damning statements or fair comment, companies face significant challenges in curbing so-called “social media harm”. This is particularly true if such comments do not pass quickly and start to “storm”.  With the prevalent use of social media and its instantaneous reach, it is almost inevitable that most brands will face “some kind of social media drama” at some point in time. Since defamatory postings on social media pose a significant risk to brands’ reputational integrity, it is critical that companies learn to distinguish between damaging statements and those that can be chalked up to general customer or employee complaints, regardless of how emotive the latter can be. Companies should take active steps to protect their reputations. Such steps include understanding the rules of engagement on such platforms; setting up internal escalation policies and processes for dealing with and evaluating comments, which appear to attack their brands; educating themselves on the potential risks to reputational value and investing in their online reputation management. Legal remedies exist, but in the case of social media, are usually instruments of last resort and given the power of social media to “flame”, these should be very carefully evaluated before being pursued.

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