What Are the Legal Implications of Social Media Marketing for Your Business?
Social media has become a central platform for business marketing. Whether a company is large or small, maintaining a presence on social platforms can influence consumer behavior, improve engagement, and help increase sales. However, as more companies use these platforms, legal concerns are growing.
For businesses in California, where both state and federal regulations apply, it’s important to understand how social media marketing intersects with business law.
At The Law Offices of Steven E. Springer, we can review the most important legal considerations associated with social media marketing from a business law perspective.
Advertising Claims Must Be Truthful and Not Misleading
One of the most common legal issues in social media marketing involves advertising content. Under both federal law and California's Business and Professions Code, any promotional statements made on social media must be truthful, supported by evidence, and not misleading.
The Federal Trade Commission (FTC) requires that advertising claims—whether made in traditional media or on social platforms—must be substantiated. Businesses must be careful when making statements about the performance, pricing, or benefits of a product or service. This rule applies to posts, videos, sponsored content, and even hashtags.
Key points to follow when creating advertising content:
Avoid exaggerated or unsupported claims about products or services.
Include disclaimers when necessary to clarify potential limitations or results.
Review consumer testimonials to make sure they reflect typical experiences.
If an advertisement contains any deceptive or unproven statements, it could result in regulatory scrutiny or private legal action. California law also allows consumers to bring actions under false advertising or unfair competition statutes, making compliance essential.
Disclosures Are Required for Paid Influencer Content
Influencer marketing continues to grow, but it brings serious legal obligations. The FTC requires that any material connection between a business and an influencer must be clearly disclosed. These rules also apply under California's own truth-in-advertising laws.
Disclosures must be clear, conspicuous, and understandable. A vague or hidden tag in a list of hashtags won’t suffice. Businesses working with influencers need to confirm that the influencers follow these standards every time they post sponsored content.
When working with influencers:
Require them to use direct language like “Paid Partnership” or “Sponsored by [Company Name].”
Make sure disclosures appear early in the content and are not hidden at the end of a caption.
Include compliance terms in influencer agreements and monitor their posts periodically.
Failure to include proper disclosures could lead to enforcement actions, including civil penalties. Both the business and the influencer may be held accountable, so it’s critical to plan carefully and follow advertising laws under business law guidelines.
Intellectual Property Rights Must Be Respected
Using images, videos, logos, music, or quotes on social media often seems harmless, but businesses can face legal action if they don’t respect intellectual property rights. Copyright and trademark laws apply to social media content just as they do in any other context.
Even reposting or resharing user-generated content can pose a problem if the business doesn’t have permission. Businesses should also take care not to imply affiliation or endorsement when using another company’s name or branding.
To reduce legal risks:
Get written permission or a license before using third-party content.
Use royalty-free or purchased media from reputable sources with commercial rights.
Create internal guidelines for employees about how to share content legally.
Violating intellectual property laws can lead to cease-and-desist letters, takedown notices, or lawsuits, which can disrupt business operations and create financial liabilities.
Contests and Giveaways Must Comply with State and Federal Law
Social media contests and giveaways are popular tools for engagement, but they come with strict legal guidelines. Under business law principles, these promotions must follow state laws about lotteries, sweepstakes, and false advertising. California, like many other states, prohibits lotteries unless they meet specific criteria.
To stay compliant, a giveaway must not require a purchase or payment to enter unless it qualifies as a lawful contest of skill. If a promotion combines chance, a prize, and consideration (such as requiring a purchase), it may be considered an illegal lottery.
When planning a social media promotion:
Publish official rules that explain how to enter, who’s eligible, how winners will be selected, and what the prize is.
Include disclaimers that the promotion is not affiliated with the social media platform.
Avoid requiring users to buy anything or make a payment unless the promotion is structured as a contest based on skill.
Businesses should also retain records of entries and prize awards to protect against disputes or allegations of unfair practices.
Privacy Rules Apply to Consumer Data Collection
Social media campaigns often collect personal data, whether through contests, direct messages, analytics tools, or comment sections. In California, the California Consumer Privacy Act (CCPA) governs how businesses collect, use, and share consumer data. If a business collects data through social media—even indirectly—it may need to comply with CCPA requirements.
Businesses must inform users about what data they’re collecting, how it’s used, and whether it will be sold or shared. The CCPA also grants consumers specific rights, such as the right to request deletion of personal information or to opt out of data sales.
To comply with data privacy obligations:
Provide a clear privacy policy linked from your social media profiles and landing pages.
Avoid collecting more data than necessary to complete a marketing goal.
Implement internal procedures to respond to consumer data requests as required under CCPA.
Violating privacy laws can result in state enforcement actions, fines, or consumer lawsuits. It’s especially important to review marketing practices regularly if they include third-party analytics or behavioral targeting tools.
Employment Laws May Affect Business Accounts
If employees contribute to a company’s social media presence, issues may arise under employment law. Ownership of content, the right to use an employee’s image or name, and wage-hour considerations could all become legal questions.
For example, if an employee is asked to post content outside their usual job duties or after regular work hours, the business might need to pay them for that time. California’s wage and hour laws are strict and carry steep penalties for noncompliance.
Businesses should also address social media in employment contracts and handbooks. Topics to consider include:
Who owns content created on behalf of the business.
Whether employees may post about the business on their personal accounts.
Whether public statements made by employees could reflect on the business.
Clear internal policies can help avoid disputes and keep operations in line with employment and business law standards.
Defamation and User-Generated Content
Allowing users to post reviews, testimonials, or comments on a business’s page can promote transparency—but it also opens the door to defamation or harassment claims. If a business moderates or amplifies defamatory content, it may face legal exposure.
Section 230 of the Communications Decency Act provides some protection for platforms hosting third-party content, but this protection is limited when businesses alter or endorse that content. Businesses should be cautious about reposting negative or controversial statements from users.
It’s also important to protect the company’s reputation without overreaching. Threatening defamation lawsuits against consumers for poor reviews can backfire and lead to legal pushback under California’s anti-SLAPP statute.
To manage user content wisely:
Set and publish clear community standards for business-run pages.
Moderate abusive or illegal content without removing fair criticism.
Avoid resharing potentially defamatory posts without legal review.
This approach balances open engagement with the protections businesses need under business law.
Contracts With Marketing Vendors Must Be Legally Sound
Many companies work with outside agencies or consultants to run social media marketing. These arrangements should always be documented with clear contracts. From a business law standpoint, a poorly drafted agreement can expose a company to liability or confusion about ownership of content.
A good social media marketing contract should define:
Scope of services and deliverables.
Deadlines, payment terms, and ownership of created materials.
Legal compliance expectations, including adherence to advertising and privacy laws.
Businesses should also consider indemnity clauses and dispute resolution terms. Reviewing these agreements with legal counsel before signing can help reduce the risk of future disputes.
Social Media Can Influence Litigation and Investigations
Social media activity isn’t limited to marketing. In disputes, courts and regulators may use social media content as evidence. This includes deleted posts, private messages, and public comments. A business’s content strategy should account for the possibility that posts could later be used in litigation.
Employees should be trained on what not to post, and the business should retain backups of official content for legal records. In regulated industries, specific retention and archiving rules may apply.
Even in general business disputes, social media can become relevant in:
Breach of contract allegations.
Product liability lawsuits.
Employment discrimination or retaliation claims.
Businesses need to approach content creation with both marketing and legal implications in mind.
Social media marketing offers substantial opportunities for growth, visibility, and customer engagement. But without careful planning, it can also introduce legal risks. Advertising laws, disclosure rules, intellectual property rights, privacy regulations, and employment standards all intersect with how companies use social platforms.
California businesses must take extra care to align their social media marketing strategies with applicable business law principles. This means working proactively developing internal policies, reviewing contracts, and monitoring legal developments.
Call The Law Offices of Steven E. Springer Today
By staying organized and legally aware, businesses can reduce their risk while continuing to benefit from the reach and responsiveness that social media offers. We serve clients in San Jose, Morgan Hill, and throughout Santa Clara County. Contact us at The Law Offices of Steven E. Springer today for more information.