Compliance and Social Media: Industry Regulatory Marketing Risks
Social media puts companies at increased risk of regulatory marketing violations, failing to respond to grievances and complaints in a timely fashion, violating the intellectual property rights of third parties, as well as, risks related to unauthorized use and improper disclosures. To learn more about those risks read, Compliance and Social Media: The Corporate Risks. As pointed out in Compliance and Social Media: The Corporate Risks companies that are not in a highly regulated industry do not have the same level of exposure related to social media marketing. This article highlights some of the marketing risks unique to regulated industries, which most likely includes your company if you are reading this post.
As outlined below, companies in regulated industries have restrictions on when, how, and to whom they may market, and these restrictions apply to electronic mediums, such as social media platforms. Many regulatory bodies have issued specific regulations and guidelines defining marketing to include social media activities, and others have specific requirements for postings related to regulated offerings made by both companies and employees.
Government Healthcare Programs
Social media activity can meet the definition of marketing activity in the context of government healthcare programs. Companies that offer government health care products and services, will have to be mindful of marketing regulations, such as, Centers for Medicare & Medicaid Services (CMS) Medicare Marketing Guidelines, or State Medicaid marketing guidelines (that vary from state-to-state). The applicable regulations may require, among other things, regulatory approval of all marketing materials (print and electronic), that communications are written at a certain reading levels, that certain statements are included on all marketing communications, that particular marketing activities are limited to specific times of the year, or that incentives either are not offered, or that incentives offered be of nominal value. These regulations can apply to social media customer engagements.
Pharmaceutical companies may also have to be concerned about incentives offered, claims made, and required disclaimers or warnings. These concerns carry over to social media activity. The U.S. Food and Drug Administration (FDA) has issued draft guidelines related to marketing of FDA-regulated medical products (prescription drugs for humans and animals, prescription biologics, and medical devices) via the Internet and social media. (Internet/Social Media Platforms with Character Space Limitations— Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices; Internet/Social Media Platforms: Correcting Independent Third-Party Misinformation About Prescription Drugs and Medical Devices; and Fulfilling Regulatory Requirements for Postmarketing Submissions of Interactive Promotional Media for Prescription Human and Animal Drugs and Biologics). Companies operating in this space or sharing opinions and recommendations related to regulated medical products should familiarize themselves with these guidelines.
Financial and Insurance Industries
The financial and insurance industries are also subject to some marketing conduct regulations designed to protect consumers, and to maintain public confidence in the industries. For example, financial services advertising must meet the requirements of the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). And, Google, Twitter, and Facebook also have their own sets of rules that financial organizations have to comply when posting to these sites.
Alcohol and Tobacco
Alcohol and tobacco companies have restrictions on marketing. Agencies such as, the Federal Trade Commission (FTC) and Alcohol and Tobacco Tax and Trade Bureau (TTB) regulate the advertising of alcohol beverage and tobacco products. These agencies mandate that certain information appears in advertising, and prohibit some statements and practices in advertising, which apply to advertisements via social media. Plus, companies like Google, Facebook, and Microsoft have policies that restrict or outlaw the promotion of alcohol and tobacco products on their platforms.
This post is not intended to be an exhaustive list of regulations related to marketing in the social media space. It is merely offered to raise awareness that social media presents special concerns for those in regulated industries, as it relates to marketing. When conducting your risk assessment take into consideration all applicable laws and include those that relate to marketing.