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www.cftlaw.com © 2012 All rights reserved. BEST PRACTICES FOR USING SOCIAL MEDIA Richard J. Fidei, Esq., Partner Colodny, Fass, Talenfeld, Karlinsky & Abate June 5, 2012 1 Presented By Richard J. Fidei

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BEST PRACTICES FOR USING SOCIAL MEDIA Richard J. Fidei, Esq., Partner Colodny, Fass, Talenfeld, Karlinsky & Abate June 5, 2012

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Presented By

Richard J. Fidei

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Disclaimer The information in this presentation is intended to provide a general overview of the issues contained herein and is not intended, nor should it be construed, to provide specific legal or regulatory guidance or advice. If you have any questions or issues of a specific nature you should consult with appropriate legal or regulatory counsel to review the specific circumstances involved. Transmission or reproduction of any of the information contained herein is prohibited without the express written consent of Colodny, Fass, Talenfeld, Karlinsky & Abate, P.A.

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Talking Points • Introduction to Social

Media • Regulatory Issues • Liability Issues • Employment Law Issues • Developing a Social Media

Policy

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INTRODUCTION TO SOCIAL MEDIA

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Social Media • Social media are a group

of internet-based applications that allow for the use and exchange of user-generated content (NAIC White Paper).

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Social Media • Social media are a borderless, fluid, and interactive

platform. • A recent study found that insurers understand social

media and engage in them; next step is for them to provide more content to intermediaries such as sales agents and distributors.

• 80/20 rule • 80% of content should be informational • 20% should be promotional

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Social Media – Broad Issues • What is your presence and plan to adapt as social media

evolve? • Who can be involved?

• Employees • Agents • Third party vendors

• Marketing and advertising issues • Protocols in place and enforced

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REGULATORY ISSUES

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Regulatory Issues – NAIC White Paper • Develop policy and procedures • Comport with existing law and regulation • Product recommendations must comply with law • Static vs. interactive content • Train • Monitor and supervise • Control and enforce • Comply with state recordkeeping laws • No safe harbor

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Regulatory Issues – FINRA Guidance

• Social Media Websites & Recordkeeping • Advertisements – FINRA considers static postings to

constitute advertisements under Rule 2210. • Blogging is considered an “interactive electronic

forum” that does not require prior principal approval but must be supervised by a registered principal.

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Regulatory Issues – FINRA Guidance • Supervision of Personnel

• Policy should prohibit any associated person from engaging in business communications through social media that are not subject to firm’s supervision.

• Only trained personnel should be permitted to engage in such communications.

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Regulatory Issues – FINRA Guidance • Third Party Posts/Websites

• Posts by customers or other third parties are not viewed as the firm’s communication with the public. (NAIC White Paper adopts the same position.) • Exceptions:

• Entanglement and Adoption Theories • Monitoring - Not required but is beneficial

• Best practices include: • Establishing appropriate usage guidelines for third party posts • Processes for screening third party content based on expected

usage and frequency of third party posts • Disclosing firm policies regarding its responsibility for third

party posts

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Regulatory Issues – Advertising • Same rules apply to online advertisements as any other

media • State-specific approaches

• Some states have expressly revised their statutes/regulations to expressly include online material in the definition of “advertisement”

• Others have issued Departmental guidance with same intent

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Regulatory Issues – Advertising • Online ads cross geographical borders, raising

jurisdictional issues • Licensure • Compliance with the advertising laws of every state • Are there particular products that are only available in

certain jurisdictions? • Web traffic should be directed accordingly (drop-down

box, zip code entry, etc.)

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Regulatory Issues – Advertising • Insurance aggregators

• Contract provisions • Creation of content or prior approval • Compliance duties • Indemnification

• Dynamic vs. static content • Company approves static • Interactive – don’t necessarily approve but tricky issues

• Licensure analysis • What services is the aggregator providing? • What is the compensation structure?

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Regulatory Issues - Agents • Agent Use of Social Media - IIABA/ACT study

• Most popular agent marketing tools are: • Their own website • Facebook • LinkedIn • Email blasts

• 40% of agencies have a coordinated plan for traditional and/or nontraditional marketing; 60% do not.

• 70% do not have a formal social media policy; 30% do. • 35% of respondents allow unlimited use of social media during

the workday; 35% do not, with about half who do not taking steps to block access to social media sites.

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Regulatory Issues – Agents • Agents often create contests with prizes such as gift

cards, free car washes, donations to local charities, to drive traffic to their social media sites.

• Insurance Company’s goal should be to give producers support in figuring out what they should say – and make sure they do not say something they should not (NAIC White Paper).

• Captive vs. independent producers – Is the producer’s social media communication attributed to a specific carrier?

• If not, producer may be solely responsible for that content (not always).

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Regulatory Issues – Agents • Producers appointed for

multiple carriers

• Risk-based approach to prior or post review and approval

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Regulatory Issues – Agents • Best Practices

• Require prior approval of agent sites and selected content. • Provide agents with social media training and a social media policy. • Require good record keeping • Monitor websites and social media for compliance • Implement requirements into agent agreements • Review proper use of social media during field office visits, or

require annual certifications as to same

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Regulatory Issues – Federal Law • Federal Regulation of Insurer Advertisements

• Lanham Act - 15 U.S.C. 1125(a)(1)(B) • Civil liability for false or misleading descriptions or

representations of fact in commercial advertising. • Cases brought are not necessarily pre-empted by McCarran-

Ferguson Act. • Federal Trade Commission

• 2009 guidelines for endorsements and testimonials. • Require disclosure of connections between advertisers and

endorsers. • Bloggers must disclose a “material connection” to advertisers

and any compensation or gifts including free products.

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Regulatory Issues - Miscellaneous • Accuracy and timing • Suitable for intended audience • Consumer privacy • Consumer complaints • Record retention – big challenge

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LIABILITY ISSUES

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Liability Issues • Documentation of

Transactions • Data Security • Disclaimers • Defamation • Intellectual Property • Securities law

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Liability Issues

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• Select Federal Privacy Laws • Section 5 of the Federal

Trade Commission Act • GLB • Department of Health

and Human Services • HIPAA • HITECH

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Liability Issues • Employee Mobile Devices – Best Practices

• Institute a policy for the use and security of mobile devices. • Require password protocols. • Maintain up-to-date operating systems. • Require the use of email as opposed to text messages (greater

security) • Maintain up-to-date anti-virus software. • Consider the ability to lock mobile devices from a remote location. • Restrict the downloading of applications and other Internet content.

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EMPLOYMENT LAW ISSUES

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Employment Law Issues • Section 7 of the National

Labor Relations Act grants employees broad rights to discuss wages, hours and other terms and conditions of employment

• NLRB’s acting general counsel has published 2 reports recently finding statutory violations in a large number of social media cases.

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Employment Law Issues • Wrongful termination or supervision • Harassment • Hostile work environment • Discrimination

• Employees and job applicants • Facebook password

• Retaliation

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DEVELOPING A SOCIAL MEDIA POLICY

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Developing a Social Media Policy • By the numbers…

• 23% of employers have a standalone, dedicated social media policy.

• 43% have a social media policy that exists alongside of another policy, such as an IT or HR policy.

(October 2011 Study)

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Developing a Social Media Policy • Define your social media presence • Individual interaction vs. static posting • Upfront disclosures • Confidentiality; trade secrets; privileged information • Trademarks; copyrights

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Developing a Social Media Policy • Designate Personnel to Interact

• Licensure • Ads and marketing • What does it link to?

• Employee and Producer Notice and Training • Must be authorized • Producer contracts • Individual sites vs. business sites

• ID type of information that needs legal review • Product information • Claims/complaints • Competition

• Procedures for dealing with individual complaints / expressions of grief

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Developing a Social Media Policy • Getting personal/privacy/confidentiality • Proper Controls • Monitor and Supervise • Enforcement • Record Retention

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Questions?

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For More Information Richard J. Fidei, Esq.

[email protected] Direct: (954) 332-1758

South Florida Office

One Financial Plaza, 23rd Floor 100 SE 3rd Avenue

Fort Lauderdale, FL 33324 Main: (954) 492-4010

www.cftlaw.com

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