By Amy E. Davis

The ubiquity of social media means that companies looking to build brand awareness can, with minimal financial investment, place their services and products in front of millions of potential customers without buying a single traditional advertisement.

Yet few areas of law present as many pitfalls to companies as social media. From a strictly legal perspective, engaging in social media can be a loser for many companies. Everything you say and do can and will be used against you by hordes of status updaters, tweeters, bloggers and other potential troublemakers.

Few businesses, however, can afford to ignore social media because of its business development potential. Consider these stats:

• Facebook had more than 500 million active users last year (the U.S. population is about 309 million).
• More than 100 million people use the Facebook app on their mobile phones, meaning your customers can share a bad customer service experience instantly (and their friends can commiserate with them) while still standing in line.
• Twitter broadcasts more than 50 million tweets every day - and at least half of those aren't Charlie Sheen jokes.

Companies can harness the power of social media while controlling legal risks with the following Top Five Social Media Tips for Businesses:

1. Know the relevant laws: For starters, the U.S. Federal Trade Commission's "Guides Concerning the Use of Endorsement and Testimonials in Advertising" requires that descriptions of goods and services made by companies and their employees be accurate and substantiated. In addition, the Lanham Act and state consumer protection statutes also apply and generally prohibit misleading or deceptive advertising. Depending on your profession or industry, there may be additional prohibitions or requirements you have to take into account.
2. Draft a social media policy: Unfortunately, the mere thought of constructing a social media policy stops most companies in their tracks, but it shouldn't. Yes, it can take a little time, but the potential upside (a higher profile among your desired customer base) is worth the effort. Some best practices include:
   • Clearly define whether, how and when employees can use social media to support or market your company;
   • If you allow employees to affiliate themselves with your company on social media sites, then set parameters for what information can and can't be included in their profiles;
   • Require employees who make any claims regarding the company via social media to clearly and conspicuously disclose their employment and state that their postings are personal opinion that don't necessarily represent the company's views;
   • Prohibit employees from making false or misleading claims about the company's products or services; and
   • Regularly monitor your social media presence, looking in particular for any unauthorized and/or potentially deceptive endorsements.
3. Protect your brand: The informality of social media can lead to abuse of your company's trademarks and copyrights, so you'll want to register your brand as a username on popular social media sites to prevent unauthorized use of your company's trademark. Once you've done that, set up a system whereby you can regularly monitor these sites for the use of your company's trademarks and copyrights and, where you find violations, take steps immediately to address them. If not, what begins on the web today may cause problems for your marks elsewhere tomorrow.
4. Tread lightly when using social media in hiring decisions: It's not illegal to research an applicant by looking at his or her page on a social networking site, but it is illegal to misrepresent oneself to access an applicant's private contact (e.g. posing as an old high school friend, etc.). Using information obtained from social networking sites can open up a company to discrimination claims if there's any reason to believe the information was used unfairly. For instance, if the company declines to hire a female applicant because her social media profile revealed she's a "party girl," but they gave the job to a similarly party-inclined male applicant, the female applicant might have a credible claim for discrimination.
5. Companies who use information from these sites in hiring decisions should disclose that fact to applicants and employees. They should also keep in mind that it's never a good idea to make a hiring decision based solely on the information obtained from a social networking site. The information may be inaccurate; and it may include information that should not be considered in the hiring process, such as religion, age and national origin. For these reasons, companies may wish to enlist a non-decision maker to conduct the online search and then filter out any legally protected information before reporting their findings to the ultimate decision maker.
6. Protect your employees: Cybersmearing, particularly when it includes sexually oriented content or is motivated by a person's gender, race, religion or some other protected status, can mean trouble for employers if the company knew, or should have known, about it but didn't take steps to stop it. A company-controlled page or posting should be considered part of the workplace for purposes of its sexual harassment and anti-discrimination policies.

Yes, social media presents challenges. But so did radio, television, and the Internet. Companies that employ a few smart practices can post, blog and tweet away without fear of losing control.