Social Media the Objective of This Study Essay

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Social Media

The objective of this study is to identify one of the major social media outlets and discuss the four components of a legally astute social media marketing manager who utilizes social media outlets for consumer transactions and how each component can mitigate the risk involved in doing business in cyberspace. This work in writing will additionally list and analyze methods of alternative dispute resolution and determine which would be most effective in resolving genuine disputes that arise with consumers who may make purchases from businesses that provide links via social media. This study will additionally make a determination of how the federal government can best control these transactions since consumer transactions on social media can occur across state lines. This work will go on to examine the three branches of government and discuss which can effectuate the most significant impact on regulating consumer transactions via social media outlets. Finally, the agency relationship that exists on social media sites between the social media providers and businesses that utilize the site for advertising will be explained.


Social media is defined as "media for social interaction, using highly accessible and scalable publishing techniques. Social media use web-based technologies to turn communication into interactive dialogue." (Navetta, 2011, p.1) Social media is further stated to be "like a wide-ranging conversation that can be with the entire world, or on a very intimate level with a single individual, and often both." (Navetta, 2011, p.1)

I. Identification of Social Media Outlet

The Social Media outlet identified in this study is that of Facebook. Facebook is described as the largest social media website and is reported to have "more than 900 million users." (Mashable, 2013, p.1) Facebook was founded in 2004 by Mark Zuckerberg, an undergraduate at Harvard University.

II. Four Components of a Legally Astute Media Marketing Manager Who Utilizes Social Media Outlets for Consumer Transactions and How Each Component Can Mitigate the Risk Involved in Doing Business in Cyberspace

According to the work of David Navetta (2011) entitled "The Legal Implications of Social Networking: The Basics" social media makes provision of a "…mechanism for finding communities of like-minded (or not) individuals interested in particular topics (and sub-topics)." (p.1) Navetta (2011) reports that InfoLawGroup makes use of social media "to engage in conversation concerning issues that are important and interesting to us (and others), and by engaging in that conversation in a meaningful way, others begin to recognize and value our input (and we in turn discover experts, influencers, and valuable information resources)." (p.1) Navetta states that upon the bases of experience the primary attributes of a social network that is successful are the following: (1) clear communication; (2) multiparty interaction; (3) trust; and (4) intimacy. (2011, p.1) The work of Bagley (2008) reports that legal astuteness, which is required by today's managers who promote their products or services via Social Media websites, includes: (1) a set of value-laden attitudes; (2) a proactive approach; (3) the ability to exercise informed judgment; and (4) context-specific knowledge on the relevant law and the appropriate application of legal tools. (p.379) Law is reported to "establish the rules of the game for managers striving to create value and to capture some or all of it for the firm." (Bagley, 2008, p.379) Law is reported as well to enforce "the social consensus on moral values" and to additionally "affect the development of moral expectations." Bagley, 2008, p.379) In addition, law is stated to assist in the determination of the roles that managers play, why managers play those roles and if they have played the roles well. (Bagley, 2008, p.379) Legally astute managers are reported to "appreciate the importance of meeting society's expectations of appropriate behavior." Bagley, 2008, p.379) It is reported that management teams that are legally astute use the law and the legal system to "increase both the total value created and the share of that value captured by the firm in at least four ways." (Bagley, 2008, p. 383) Those four ways are stated as follows: (1) they use formal contracts as complements to relational governance to define and strengthen relationships and reduce transaction costs; (2) they protect and enhance the realizable value of firm resources; (3) they use contracts and other legal tools to create options; and (4) they convert regulatory constraints into opportunities. (Bagley, 2008, p. 383)

III. Methods of Alternative Resolution and Their Effectiveness in Resolving Disputes

It is reported that mediation and arbitration have "historically…distinguished themselves from traditional court litigation in part by their less formal structures and looser rules of evidence and procedure." ( p.1) It is reported that in an arbitration agreement or an arbitration policy of a provider codified rules of evidence and/or civil procedure may be imposed followed by the opinion of the court and other authoritative sources that interpret the rules. However, it is reported that when there are no binding formal rules that alternative dispute resolution participants and those who are neutral are prone to "struggle with social media issues" and to be "guided by two foundational concepts." (American Bar Association, nd) Those concepts are reported to be: (1) the balancing of the respective interests of the parties; and (2) adherence to professional ethics. (American Bar Association, nd)

IV. Methods that the Federal Government Can Use to Control Consumer Transactions Via Social Media

In a January 23, 2013 report published in the Federal Register article entitled "Social Media: Consumer Compliance Risk Management Guidance" it is reported that the Federal Financial Institutions Examination Council (FFIEC) requested comment on a proposed guidance on Social Media and consumer compliance risk management guidance wherein the FFIEC is proposing guidance "to address the applicability of federal consumer protection and compliance laws, regulations, and policies to activities conducted via social media by banks, savings associations and credit unions, as well as by nonbank entities supervised by the Consumer Financial Protection Bureau (CFPB)." (Federal Financial Institutions Examination Council, 2013, p.1) It is reported that these institutions will be required to use the stated guidance in ensuring that their risk management practices "adequately address the consumer compliance and legal risks" in a form of self-regulation. (Federal Financial Institutions Examination Council, 2013, p.1) The adoption of the guidance by state regulators is stated to be expected and encouraged. Laws that are applicable are stated to include: (1) Fair Lending Laws: Equal Credit Opportunity Act / Regulation B. And Fair Housing Act; (2) Truth in Lending Act / Regulation Z; (3) Real Estate Settlement Procedures Act; (4) Fair Debt Collection Practices Act; (5) Deposit Insurance or Share Insurance; (6) Advertising and Notice of FDIC Membership; (7) Electronic Fund Transfer Act/Regulation E.; (8) Community Reinvestment Act; (8) Gramm-Leach Bliley Act Privacy Rules and Data Security Guidelines; (8) CAN-SPAM Act and Telephone Consumer Protection Act; and (9) Children's Online Privacy Act. (Federal Financial Institutions Examination Council, 2013, p.1)

V. Three Branches of Government and Ways to Effectuate Most Significant Impact on Regulating Consumer Transactions Via Social Media

According to a publication of the White House, the principles that should be adopted for guidance in drafting the rules that govern global electronic commerce include those stated as follows:

(1) Parties should be free to order the contractual relationship between themselves as they see fit;

(2) rules should be technology-neutral and forward looking;

(3) existing rules should be modified and new rules should be adopted only as necessary or substantially desirable to support the use of electronic technologies;

(4) the process should involve the high-tech commercial sector as well as businesses that have not yet moved online. (The White House, nd, p.1)

The three branches of the government including the executive, legislative and judicial branches should all work together to modify existing laws and to create new laws that enable the use of the Internet in commercial consumer transactions but that…[continue]

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