It has been almost a decade since Congress passed the Sarbanes-Oxley Act in the wake of the Enron, Tyco and WorldCom scandals, seeking to put in place a variety of measures to protect investors and address standards of behavior. Over the years, once-controversial practices about disclosure and ethics have become generally accepted standards.  But the social media explosion — from email and Facebook to blogs and Twitter – is making a hash of once-resolved issues and creating all kinds of new dilemmas

In this second-part of a two-part series, James Hyatt surveys some of the approaches toward social media challenges being pursued by government, corporations and a wide variety of business professionals.  The first part of the series is available here.

by James Hyatt

While businesses sort out their social media policies, many federal agencies are wading in to referee the online world.

Social Media_shutterstock_36187810–The Obama Administration, through the Commerce Department’s National Telecommunications and Information Administration, is drafting what it calls “Internet Policy 3.0,” to address several issues including privacy and cybersecurity.  One proposal: Fair Information Practice Principles, which an official says would be “the information privacy framework in the United States to clarify how personal data on the Internet is protected.”

–The Federal Trade Commission in April moved up its review of the Children’s Online Privacy Protection Rule to see if changes are needed; the rule requires operators of Web sites and online services that target children under age 13 to obtain verifiable parental consent before they collect, use, or disclose personal information from children.

–The Food and Drug Administration’s division of Drug Marketing, Advertising, and Communications expects to begin issuing as early as December 2010 guidance on a series of social media issues faced by the pharmaceutical industry, such as how manufacturers can address misinformation listed on a third-party site.

— Last December, the Federal Trade Commission revised its guidelines on use of endorsements and testimonials in advertising. Among other changes, the revisions declare that celebrities should disclose their relationships with advertisers “when making endorsements outside the context of traditional ads, such as on talk shows or in social media.”

The Defense Department in February took steps to open up social media links to members of the armed forces, and notes thousands of Facebook, Twitter and other page have been registered. Failing to obtain the “chain of command’s approval, well that’s not good – plain and simple,” the DOD says.

–The Securities and Exchange Commission has encouraged public companies to expand shareholder and public communication through use of the Internet; the policy has led to some controversy over how a company goes about releasing financial information promptly and widely.

Microsoft in October said it would begin using its Investor Relations Web site as the “authoritative portal” for financial and other information, and no longer use financial newswires.  The move prompted Business Wire, owned by Berkshire Hathaway Co., to label the move “a textbook example of ‘worst practices’ investor relations.”  Business Wire, of course, derives much of its revenue from disseminating corporate press releases. Business Wire Chairman and CEO Cathy Baron Tamraz pointedly concluded: “There’s a large investor in Omaha who doesn’t want to be checking hundreds of websites minute-by-minute throughout the day.  But then again, who would?”

Can I buy a social media fix?

As might be expected, the social media commotion has prompted a wave of products and services intended to help businesses cope with the challenges – much like the trend I chronicled five years ago in the wake of Sarbanes-Oxley.

Cisco Systems Inc. in early November unveiled Cisco SocialMiner, software designed to monitor in real time “status updates, forum posts, or blogs from customers…alerting enterprises of conversations related to their brand.” Cisco said with 34% of online Americans having used Facebook, Twitter “or other social media to rant or rave about a product, company or brand,” businesses need to be aware of what customers are saying and “respond to general inquiries or rectify customer service issues so as to enhance and protect brand reputation.”

And Cisco introduced a “rich media capture platform that supports the recording, playback, live streaming and storage of media, including audio and video” to capture, preserve and mine conversations for business intelligence.

(Cisco’s Facebook page in mid-November had 113,862 “friends”.)

Or consider ReputationDefender, a service that “controls how you look when someone Googles you or your business.” The MyEdge Pro product is “proven to increase positive content and actively combat false, misleading or irrelevant Google results for businesses and business owners including doctors, lawyers, executives, contractors, real estate agents – anyone whose business depents on their reputation.”

For $9.95 a month, another of the company’s products, MyPrivacy, will remove personal information from the web, monitor the Internet, and create a “do not track” list for you at over 100 online networks.

TextGuard provides a service to let businesses record telephone conversations and voicemails on company mobile devices; financial regulators increasingly are requiring that companies keep a record of such communications.

And companies with a long history of document storage and research services are expanding into the wired world. Xerox Litigation Services, which hosts more than two billion pages of data for 20,000 clients, last year added its “E-mail Analytics” service to help aid investigations and help companies respond to requests in legal cases. Xerox said more than 70% of the data it hosts is in email.

Hello Sweetheart, Get Me Twitter

Journalism is awash in hand-wringing over social media issues. Reporters debate using Facebook and Twitter in chasing down story ideas; editors worry about how to link online material to other web sites; and readers wonder about how reliable “news” they see on the web really is.  (A photo of a tornado passing the Statue of Liberty, widely circulated in September when a storm hit the New York City area, turned out to be from 1976.)

Washington Post managing editor Raju Narisetti in October reminded newsroom employees not to use social media accounts to “answer critics and speak on behalf of the Post.” The reminder came after a staffer apparently fired back at critics of a piece the paper had published.

Many major media organizations have revised and reissued their ethical codes to address the concerns.

For example, Reuters’ guidelines on “Reporting from the Internet” stress that “discovering information publicly available on the web is fair game. Defeating passwords or other security methods is going too far.”  And, “do not use anything from the Internet that is not sourced in such a way that you can verify where it came from.”  Wikipedia “can be a good starting point for research, but it should not be used as an attributable source,” Reuters declares.

National Public Radio in October reminded news staff members that “NPR journalists may not participate in marches and rallies involving causes or issues that NPR covers,” and pointedly noted the restriction included the Jon Stewart and Stephen Colbert rallies in Washington. And, the memo added, “you must not advocate for political or other polarizing issues online.”

Doctors have their own social media issues; some have abandoned use of Facebook and other venues, deciding the risks of give-and-take with and about patients is too great a threat to privacy. A California psychologist writes that “casual viewing of clients’ online content outside of the therapy hour can create confusion in regard to whether it’s being done as a part of your treatment or to satisfy my personal curiosity.”

Dr. Arthur R. Derse of the Medical College of Wisconsin, in a recent AMA Ethics Forum column, writes “an online consultation using social networks can go wrong in myriad ways. The dissemination of patient information in an electronic form to an open forum is fraught with risk.”

And medical students can be just as thoughtless as other students in their social media use. The Journal of the American Medical Association last year surveyed medical schools and found and 47 out of 78 schools reported “incidents of students posting unprofessional online content,” including violations of patient confidentiality, use of profanity, discriminatory language, depiction of intoxication and sexually suggestive material.  And the survey found 30 schools had informally warned students and three had dismissed students.  But only 28 out of 73 deans queried said their schools had policies about student-posted online content.

Co-eds Google Their Dates. What about Lawyers and Litigants?

The answer seems obvious: somebody sues you – see what they’ve been up to online. Not so fast.

Legal ethics committees in New York and Pennsylvania have addressed the question. In Pennsylvania, an attorney wondered whether a third party could “friend” a witness.  The committee said no, calling such a step deception by not revealing the purpose to obtain information for use in a lawsuit.

In New York, the question was whether a lawyer could access a public website.  The committee said okay, so long as the profile is generally available and the lawyer doesn’t “friend” the other party.

Currently, there are challenges to trial decisions because a juror tweeted during the trial, and debates over letting reporters tweet from the courtroom (some states permit it, federal courts generally oppose). A North Carolina judge was reprimanded for “friending” defense counsel and discussing a pending case with the judge (considered improper ex-parte communications).  And many states are instructing jurors against using social media while hearing cases. “The information you are accessing is not evidence,” declares a model jury charge in New Jersey.

Let’s Go to the Videotape!” – Not So Fast

The sports business presents a particularly curious set of ethical issues over social media.

Networks, which pay huge sums for exclusive rights to broadcast sporting events, are finding it hard to keep control over the broadcasting of live sporting events. They don’t want sportswriters using their content via the Internet and cellphones.

The New York Yankees ban fans from bringing video cameras and laptop computers into Yankee Stadium.  The Washington Redskins have banned writers from tweeting or blogging while watching practices.  The National Football League bans players and coaches from using social media such as tweeting for 90 minutes before, during, or some a time after a game.

Sports broadaster ESPN last year temporarily suspended popular “Sports Guy” columnist Bill Simmons for criticizing an ESPN radio station partner on Twitter. ESPN earlier had issued a policy prohibiting reporters and writers from discussing sports on social-networking sites.

The NCAA tries to keep coaches and schools from using social media outlets in recruiting.  While they can advertise their programs online, they’re prohibited from using a site “for direct person-to-person contact with an individual potential student-athlete.”  However, signing on as a “friend” doesn’t count as direct contact, the NCAA says. (Indiscrete Facebook entries by partying athlete recruits this year has led to legal investigations.)

This is the second part of a two-part series.   The first part is available here.

James Hyatt, a retired reporter and editor for The Wall Street Journal, has been writing about business ethics and social responsibility issues since 2005.

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