California business owners know that their company could suffer significant losses if they are faced with a lawsuit – whether it is one brought against them or one they file themselves.

It is possible to proactively plan for the risks involved in a lawsuit; unfortunately, it is difficult to plan for how consumers will react to a lawsuit. And many of those reactions end up on social media for the world to see. If consumers perceive any action as unfair or negative, they might make one post that could significantly increase the risks business owners must manage in addition to the stress of litigation.

SOCIAL MEDIA CAN INCREASE LOSSES

Social media has become almost an essential part of everyday life – for both individuals and businesses. Companies can create social media pages to connect directly with their consumers and boost sales and their brand.

However, the benefits of social media also come with risks. Social media also allows consumers to obtain real-time updates and spread messages faster than ever before. If even one negative post about a company goes viral, that company could suddenly face a significant financial loss and a lost consumer base.

Consumers have been known to plan boycotts and even sign petitions against companies. And one e-commerce company in Colorado recently experienced the detrimental effects social media can have on business.

CASE IN POINT: BACKCOUNTRY.COM

In November, the outdoor Colorado company Backcountry.com, founded in 1996, faced just the kind of backlash mentioned above. The company filed trademark infringement claims against several small businesses using the term “backcountry” in their company names as well as online domain names. There are roughly 50 unresolved legal actions attached to these claims.

Although many reports say Backcountry.com had valid claims, the lawsuits backfired. Upset consumers took to social media against Backcountry.com. According to The Colorado Sun:

  • Consumers created a Facebook page to boycott Backcountry.com’s products. It currently has more than 12,000 followers;
  • Many also began a GoFundMe page to support the small businesses named in Backcountry.com’s claims; and
  • Thousands of former Backcountry.com consumers called and emailed the company to voice their disapproval as well.

While this case is not in California, it sheds light on the risks that a company can face on social media.