Proposed Federal Guidelines Target Financial Institutions' Social Media Use, Reports Machado

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LeClairRyan attorney says rules provide sound advice for companies of all types.

Leslie Paul Machado

In the online world, just like the ‘real world,’ companies need to make sure that they are not doing anything to harm their reputation. A risk compliance program is a good start.

Financial institutions and other companies that are stepping up their use of social media need to be aware of evolving federal guidelines, warns LeClairRyan shareholder Leslie Paul Machado in a June 15 CorporateComplianceInsights.com column. Businesses using Facebook and other sites to develop and expand their social media presence could find their risk profile being adversely affected, the attorney writes in the column (“Seven Components of an Effective Social Media Risk Compliance Program”).

“The increased risks can include the risk of harm to consumers, compliance and legal risk, operational risk and reputational risk, according to proposed guidelines recently released by the Federal Financial Institutions Examination Council,” explains Machado, who counsels and advises companies on privacy policies and represents employers in a wide variety of employment matters from his base in the national law firm’s Alexandria office. “Increased risk can arise from a variety of directions, including poor due diligence, oversight, or control on the part of the financial institution.”

Although the proposed federal guidelines are directed towards financial institutions, “the document contains excellent advice for every company that is already using – or is thinking about incorporating – social media as a component of its business plan,” he writes. Firms should make sure they have a risk management program that can identify, measure, monitor, and control the risks related to social media.

“Among other considerations, such a program should include a governance structure that sets out clear roles and responsibilities, and policies and procedures to make sure that the social media complies with all applicable laws, regulations and guidance,” he says. “An employee training program should also be in place that incorporates the institution’s policies and procedures for official, work-related use of social media, and clearly defines impermissible activities.”

Even if a company hasn’t done anything wrong, the mere perception of privacy breaches or violations of consumer protection rules could tarnish the hard-won reputation of a business, Machado cautions. “In the online world, just like the ‘real world,’ companies need to make sure that they are not doing anything to harm their reputation. A risk compliance program is a good start.”

To read the full column, go to:
http://www.corporatecomplianceinsights.com/seven-components-of-an-effective-social-media-risk-compliance-program/

About LeClairRyan
As a trusted advisor, LeClairRyan provides business counsel and client representation in corporate law and litigation. In this role, the firm applies its knowledge, insight and skill to help clients achieve their business objectives while managing and minimizing their legal risks, difficulties and expenses. With offices in California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C., the firm has approximately 350 attorneys representing a wide variety of clients throughout the nation. For more information about LeClairRyan, visit http://www.leclairryan.com.

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Press Contacts: At Parness & Associates Public Relations, Marty Gitlin (631) 765-8519, mgitlin (at) parnesspr (dot) com or Bill Parness, (732) 290-0121, bparness (at) parnesspr (dot) com

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