Preparing for social media risks

Well Covered

Social media risks for businesses have increased since recent court cases found some Facebook page administrators of public pages are considered to be primary publishers of third-party comments.

The cases, heard in the NSW Supreme Court of New South Wales, involved an individual who sued a range of media outlets regarding defamatory comments made about him that were published on their Facebook pages. The cases included Voller v Nationwide News Pty Ltd; Voller v Fairfax Media Publications Pty Ltd; Voller v Australian News Channel Pty Ltd [2019] NSWSC 766 (Voller).

While these decisions are open to appeal, they suggest that businesses may be liable when a member of the public posts defamatory comments on their public Facebook pages. It is important firms are aware of this risk when managing and administrating their own social media profile.

Risks explained

In fact, businesses face many risks when it comes to social media, including defamation and reputation damage. But there are mitigation strategies they can put in place to protect against these threats. Insurance also has a role to play, but it is important to understand how cover works in relation to social media risks, because the protection insurance provides has limitations.

If you have been accused of defamation as a result of comments you have made on social media in your capacity working for a business, cover may be available within public and product liability insurance, professional indemnity insurance, as well as certain other policies.

But if you have made defamatory comments in a personal capacity, it’s unlikely business cover will provide any protection.

Insurance may also respond if trolls or keyboard warriors have attacked you on social media in your capacity working for or running a business. Again, insurance policies such as public and product liability insurance, professional indemnity insurance, as well as certain other policies may provide cover for the cost of legally defending yourself against any defamatory comments made against you.

But, says Michael White, Steadfast’s broker technical manager, cyber policies will typically not respond when a business or the people working in it are attacked on social media.

“Generally speaking, there needs to have been some kind of attack on your computer system for a cyber policy to respond,” he says.

There is, however, another type of policy that may help pay for the cost of public relations activities in the event people in the business have been defamed and work needs to take place to restore the affected parties’ reputation.

“Management liability policies may include cover for public relations costs,” White explains.

“But there is considerable variation between policies in terms of the extent of the public relations expenses cover they provide. So ensure you know how your cover works when it’s put in place, so that in the event of a claim, you have a good understanding of how the policy may respond,” he adds.

For instance, while policies typically won’t provide cover for threats such as someone trolling your business, it may provide cover for the loss of a major customer contract. For this to happen, the trolling or event would likely need to be defined as a crisis event.

While laws are cyber issues are tightening, it’s essential to ensure moderators and administrators understand the rules around defamation to reduce the risk of this being an issue for the business when it comes to its social media profiles.

Important disclaimer – Steadfast Group Limited ABN 98 073 659 677, its subsidiaries and its associates.The views expressed are those of the author only and do not necessarily reflect those of Steadfast.

This magazine provides information rather than financial product or other advice. The content of this magazine, including any information contained on it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.  

Information is current as at the date articles are written as specified within them but is subject to change. Steadfast, its subsidiaries and its associates make no representation as to the accuracy or completeness of the information. Various third parties, including Know Risk, have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of Steadfast Group Limited.


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