The Social Network Part 2


Joanna Loy helps companies avoid the pitfalls of using social media


Social media marketing is growing at a staggering rate daily. It is one of the easiest and fastest means for businesses to reach out to their customers and is perhaps, the most extensive means by which to do so.

A recent global survey conducted by Regus, a Belgium-based workplace solutions provider, found that 51% of Malaysian companies have been successful in securing new business through social networking activities last year. The survey also revealed that 68% of businesses in Malaysia use websites such as Twitter to engage, connect with and inform existing customers. About 75% of Malaysian companies encourage their employees to join social networks such as LinkedIn and Xing compared with 53% of companies globally. The survey also discloses that 52% of Malaysian companies devote up to 20% of their marketing budget to business social networking activities.

Gone are the days where companies can afford to simply sit back and draw in customers with their products and services in a ‘take it or leave it’ manner or reach out to customers through traditional marketing methods such as networking or third party testimonies about a company’s product or service.

Customers today are likely to be demanding and crave for attention and engagement. It is not uncommon to see both positive and negative information being passed on at lightning speed, thanks to social media engines such as Facebook, Twitter and YouTube. Double-edged sword it may be, but a company which ignores social media would do so at its own peril.

How then can a company navigate itself through the dangerous world of social media?



A company must establish clear and specific guidelines for social media usage by employees both at work and home. Employees who speak publicly about the company and their products or services as well as their personal lives need to make it clear that although they are employed by the organization, the views and opinions expressed by them are their own and do not represent the views and opinions of the organization.

The guidelines should impose a mandatory obligation on the employees to adhere to the same, failing which they may be subjected to disciplinary actions or termination. Otherwise, companies may find themselves at the short end of the stick by ending up with a wrongful termination suit by the employee or a potential defamation suit.

The need to set out clear and specific guidelines is particularly important for companies that have specific marketing personnel who engage with their customers on a daily basis via social media. Similar safeguards should be applied to independent third party marketing specialists engaged by companies.



Intellectual property rights, such as trade marks, copyright, patents, industrial designs, trade secrets and confidential information, protect the product of a person’s work by hand or intellect against unauthorized use or exploitation by another.

Users of social media, including companies, are often unaware that content such as photographs and videos which are uploaded online often include copyrighted materials. Similarly, users who adopt the word, name, symbol or sound of another party or falsely misrepresent or identify themselves as another party, or as being associated with another party, may give rise to legal liability under the Trade Marks Act 1976 or the Trade Descriptions Act 1972.

Just because the content is online does not mean that it is free for all to be re-posted. Companies may find themselves embroiled in a copyright or trade mark infringement suit if they are not careful.

Ultimately, users and companies simply need to bear in mind that the online environment is not a legal vacuum. In general, if something is illegal “offline”, it will also be illegal “online”.



Companies that use social media to reach out to customers should be aware of the provisions of Sections 211 and 233 of the Communications and Multimedia Act 1998 and take steps to ensure that contents posted or disseminated by them do not run afoul of these provisions.

Section 211 prohibits the provision of content (namely any sound, text, still picture, moving picture or other audio-visual or tactile representation or any combination of the foregoing, which is capable of being created, manipulated, stored, retrieved or communicated electronically) which is indecent, obscene, false, menacing or offensive in character with intent to annoy, abuse, threaten or harass any person.

Section 233 inter alia renders it an offence for any person to make or initiate the transmission of any obscene, indecent, false, menacing or offensive comment or communication with the intention to annoy, abuse, threaten or harass any person at any electronic address.



Various Codes of Practices, namely the Malaysian Communications and Multimedia Content Code, the General Consumer Code of Practice for the Communications and Multimedia Industry Malaysia and the Malaysian Code of Advertising Practice by the Advertising Standards Authority Malaysia, have been adopted by specific industries such as providers of communication and multimedia services and the advertising industry in Malaysia. These codes form the framework for self-regulation by the aforementioned industries.

Companies that use social media to promote their products and services should ensure that their practice comply with the relevant codes.

For example, it is common practice for a company to set itself apart from its competitors by way of comparative advertising, i.e. an advertisement that makes comparisons of the products or services of the advertiser and those of their competitors to encourage the customers to select the products or services of the advertiser.

Companies need to be aware that comparative advertisements should adhere to the principles of fair competition and that there is no likelihood that the customer could be misled. The subject matter of comparison should not be chosen in such a way as to confer an artificial advantage to the advertiser or to suggest that a better bargain is offered than is truly the case. Points of comparison should be based on facts which can be substantiated and should not be unfairly selected.

CyberSecurity Malaysia, an agency of the Ministry of Science, Technology and Innovation of Malaysia, has also introduced the Best Practices on Social Networking Sites to draw the attention of individuals and organizations to the possible impact of using social media. Companies that use social media may also wish to familiarize themselves with this publication.



Although the Personal Data Protection Act 2010 ("PDPA") became law on 10 June 2010, it will only come into operation on a date to be appointed by the Minister. To come within the ambit of the PDPA, personal data must be in respect of a commercial transaction.

Various restrictions will be imposed on the use and dissemination of personal data once the PDPA comes into operation. Personal data may only be processed with the consent of the data subject and for the purpose for which the consent was given. Such data may not be disseminated to other persons without the express consent of the data subject.

Further, the PDPA imposes an obligation on a data user to take steps to protect the personal data from loss, misuse or unauthorized access or disclosure and to retain such data only for the duration for which it is required. Restrictions are also imposed on the transfer of such data to any place outside Malaysia.

Companies that use social media for their businesses should ensure that their practices of collecting, processing, using, storing and disseminating personal data comply with the provisions of the PDPA as Datuk Joseph Salang Gandum, the Deputy Minister of Information, Communications and Culture, has indicated that the PDPA will be enforced in early 2012 (New Straits Times Online, 21 June 2011).

The PDPA will not apply to a company which carries on credit reporting business. Instead, such a company must comply with the provisions of the Credit Reporting Agencies Act 2010 when it comes into operation.



The use of social media is no longer the domain of individuals. Many companies have successfully adopted social media as a platform to promote their business. A company which seeks to reap the benefits of social media must ensure that its practices comply with the existing legal and regulatory framework and evolve rapidly to embrace changes that take place in the ever-evolving world of the Internet.


JOANNA LOY ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )



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