Retail Derail: How Social Media Risks Impact Retail Businesses

“If Facebook were a country, it would be the world’s third largest,” writes Ashlie Beringer and Alex Southwell of the international law firm Gibson Dunn. In their report, Critical Social Media Issues for Retail Companies ^[1], the legal duo provides critical insights into social media risks for retailers, including copyright infringement, trademark protection, trade secret disclosure, “brandjacking,” and the dangers of community pages, such as “gripe” sites where irritated customers go to complain anonymously.

On social media, most risks are outside the control of an organization but this is intensified in retail where the B2C (business-to-consumer) business model increases the likelihood and scope of a customer scam. The uncontrolled, informal, fast, and interconnected nature of social media multiplies the effect of social media risk for retailers according to Beringer and Southwell. Dissatisfied customers or disgruntled employees have the ability to leverage the extended reach of social media to impersonate companies or individuals, disclose trade secrets, or create negative social media pages, which can make retail businesses feel like social media risk is spiraling out of control.

At ZeroFox, we see a lot of this type of activity in the retail sector. We find that retail brands are frequently impersonated. Their social presence makes retailers perfect targets for any social media brand impersonation or customer scam. Malicious actors fool retail customers using links to phony promotions, flash sales, and deep discounts. We find that malware, adware, or phishing attacks are typically behind these links in an attempt to compromise a customer’s identity and access their financials.

When customers discover that their information has been compromised, the backlash can be extreme. For example, many Target customers temporarily stopped shopping after the 2013 data breach ^[2] and Target’s CEO lost his job ^[3]. Yet, retailers cannot simply ignore or abandon social media. Ignoring it would be chaos as impersonations, fraud, and risk could run unchecked and spiral out of control. Equally, the direct consumer connection is too valuable to abandon. Thus the need emerges for products that can help retailers mitigate social media risk while leveraging the positives.

For more information on how social media risks impact retail businesses, read Beringer and Southwell’s full briefing here

Sources:
^[1] Beringer, A., & Southwell, A. (2011, January 18). Critical social media issues for retail companies. Gibson-Dunn. Retrieved July 22, 2014, from http://www.gibsondunn.com/publications/Documents/WebcastSlides-CriticalSocialMediaIssuesforRetailCompanies.pdf
^[2] D’Innocenzio, A. (2013, December 20). Target customers angered over response to credit-card data breach. Los Angeles Daily News. Retrieved July 22, 2014, from http://www.dailynews.com/general-news/20131220/target-customers-angered-over-response-to-credit-card-data-breach
^[3] Target CEO Loses Job After Security Breach. (2014, May 5). ABC News. Retrieved July 22, 2014, from http://abcnews.go.com/Business/video/big-number-target-ceo-loses-job-security-breach-23588889