Courtney Love, hard-rocking bad girl and widow of Nirvana front man Kurt Cobain, has a message for all social media users.

Beware lawsuits.

Love just paid a $434,000 out-of-court settlement to a fashion designer she’d trashed on Twitter. Their business relationship had apparently hit the rocks and Love was venting publicly.  Dawn Simorangkir sued for defamation after Love posted a series of bitter tweets, one calling the designer a  "drug-pushing prostitute with a history of assault and battery." 

Last month British politician Colin Elsbury was ordered to fork over close to $5000 in damages and pay the legal fees of a political opponent. He’d tweeted that his rival in a 2009 election had been removed from a polling station by police.  The rival sued, saying the tweet was untrue and defamatory, and won the case. 

Here in Canada, the National Post newspaper didn’t face legal action, but had to publish an apology in 2009 after one if its reporters got into an obscenity-laced ‘Twitter war’ with a marketing consultant who hadn’t returned his call in a timely manner.  "F--k you.  Seriously.  F--k you" ran one of his furious tweets. 

"When you put something online, it’s like shouting down a hallway," says Leanne Bucaro of Infinity Communications, a small Oakville-based publicity firm.  "Sometimes people rant thinking they’re ranting to their friends, but really it’s out there for everyone to read."

Entrepreneurs take note.  Social media is the flavour-of-the-month (possibly of the year and maybe even the decade), and while Twitter and Facebook are free, the cost can be high if you or your employees make defamatory statements, or say anything that isn’t brand-friendly.

Remember the recent slip-up when this lovely sentiment appeared on Chrysler’s official Twitter account?  "I find it ironic that Detroit is known as the motor city, and yet no one here knows how to f--king drive".  The profane message came from a staffer at the agency Chrysler had hired to handle its social media messaging.  Not only did the author of the tweet lose his job, the agency lost its contract with Chrysler.

"The explanation given was that he thought it was his own account, not Chrysler’s Twitter account," says Michael Smith, a lawyer with Borden Ladner Gervais in Toronto.  "And that may be totally true, but then you have to question how could that mistake be made?  And what kind of processes would a company need to put in place so that something damaging doesn’t get inadvertently tweeted?"

Smith has been talking up his concerns about defamation via social media lately.  "There is a big risk," he explains. " But I don’t think there’s a large appreciation of it."

Both Smith and PR advisor Bucaro believe that large companies are aware of how defamation works, and have spelled out guidelines to the employees that are posting for the company on Facebook or Twitter.  But both worry that independent entrepreneurs with smaller operations may not have the same awareness.

Defamation happens when someone makes a public statement that has a negative impact on the reputation or image or another business, person or product.   And anyone who feels you’ve hurt them can sue, regardless of the merits of their complaint.

When I consider what sort of damaging things a small business owner might say on Twitter or Facebook, I think of comments that would boost their own product or service, and perhaps disparage their competitors.  Smith says he hasn’t seen many of those sorts of cases, but definitely believes entrepreneurs should be warned.

"Social media is becoming a business imperative, so from the perspective of risk management, I would counsel businesses that you have to have a pretty narrow group that has access to that account.  You should have a level of review – a second set of eyes on it before it goes out."

Who wants to spend the time and money required to defend a lawsuit?  After all, the only defense against a defamation suit is to prove your statement is true – and that requires real proof, not just a personal opinion. You need independent evidence, witnesses, etc.  There are several other exceptions to strict proof of truth.  You can argue, for example, that your comment was made to in the service of "public interest", because public safety was at issue.  

But Smith raises an even more frightening legal aspect to social media.  Never mind what you post, as a business owner – what is your staff saying on-line, on any subject whatsoever?  If they’re using your company’s computer or mobile device to make defamatory statements, you could be held liable as having helped to "publish" those provocative remarks.

"I haven’t seen a case like that go to trial or judgment yet," says Smith. "But in Ontario and most jurisdictions in North America, most cases settle without going through a full trial.  I suspect and have seen anecdotal evidence to suggest that dozens of these cases are being made right now." 

Imagine if one of your employees vented their outrage over some product on the Internet, and the manufacturer came after you with a lawsuit!   Smith says it could happen. "The legal framework is certainly there to make that argument."

And forget trying to protect yourself by locking down Facebook or Twitter at the office.  "How does that help when everybody has that stuff on their phone?" asks Smith.  "If they can’t get it on the desktop, they can reach down into their purse or pocket."

Social media is a specialty for PR practitioner Leanne Bucaro.   She sees the benefit it offers business people who want to reach potential customers in a new way, and be top-of-mind when those people are ready to make a purchase.   "But there are definitely risks," she says.  "Whether it’s traditional communication or on-line, you have to monitor not only what you’re saying but also what people are saying about you."

It appears you don’t have to be as outrageous a personality as Courtney Love to get into trouble with social media.