TWITTER is fast becoming an important channel for public companies to communicate with investors, but the platform’s 140-character limit for messages creates compliance challenges that may be preventing more companies from participating.
In many situations, regulated communications require disclaimers or warnings that don’t fit into Twitter’s character limit. While most of the 600-odd public companies we are tracking on Twitter seem to either ignore or openly flout legal considerations, companies that do take compliance seriously are hamstrung by Twitter’s inflexibility.
In this article I suggest that Twitter could remedy the problem by attaching a disclaimer link to the metadata that accompanies each tweet on the Web and the API. The addition of a disclaimer link to individual tweets could provide a compelling reason for more companies to join the service and for existing businesses to upgrade to paid accounts.
Current ineffective workarounds for disclaimers
For public companies that use Twitter, legal concerns include compliance with the adoption and endorsement rules for third-party content, forward-looking statements, and non-GAAP financial measures. Companies in certain industries, such as financial services and pharmaceuticals, also must contend with other regulatory constraints when communicating via Twitter.
Since it is currently impossible to include disclaimers with every tweet due to Twitter’s limits on message length, well-meaning companies that take their compliance obligations seriously have attempted to use workarounds to apply disclaimers to their communications on Twitter.
However, in all cases these fail to ensure compliance because people can access companies’ tweets without ever seeing the relevant disclaimers or having direct access to them. Companies currently use one or more of the following ineffective methods when attempting to apply legal cautions to their tweets:
Twitter backgrounds
Some companies add disclaimer text to their Twitter account background images. The problem with this is that many users will never see the disclaimer on a company’s background image because they do not need to use the Twitter website to follow its tweets.
People can follow a company via one of many popular Twitter clients like TweetDeck, Seesmic or Tweetie, which means they will not see the company’s profile page that contains the disclaimer on the background image. Twitter backgrounds also do not appear on Twitter’s mobile site.
And even if people do use the Twitter website to follow the company, they still might not be properly cautioned. Any disclaimer on a Twitter background is likely to be incomplete and require people to visit a fuller version on the company’s website. However, no hyperlink can be provided without users installing special software since the disclaimer is part of an image.
It’s also worth noting that even if people do visit a company’s profile page on the Twitter website, they still may not see the disclaimer text if their browser window is set to a small size, if they have images disabled, or if they’re using a screen reader.
Consequently, adding disclaimers to Twitter backgrounds is almost entirely ineffective, although one should not blame companies for trying this approach because they have little choice.
Cliffs Natural Resources (NYSE:CLF) warns users on its background image not to rely on Twitter for timely updates, but many people will never see this important notice when they subscribe to the company’s tweets.
Twitter bios
A few companies use their one-line Twitter bios to try to caution their followers or make them aware of a disclaimer. This approach is slightly more effective than putting disclaimers on Twitter backgrounds because bios are more visible. Bios typically are included in the profile information on Twitter clients such as TweetDeck, whereas company backgrounds are not.
However, users of these Twitter clients still can follow company accounts without ever viewing a company’s bio information, which means they may never become aware that the tweets are subject to a disclaimer. Twitter restricts bios to no more than 160 characters, which does not leave much room for an effective caution.
Companies can provide a short URL for a fuller disclaimer in their bios, but people will have to copy or manually type in the address because links in bios are published as text instead of hyperlinks. Overall, using Twitter bios for disclaimers is ineffective.
Disclaimers in Twitter bios don't ensure that users will see them when viewing individual tweets in isolation.
Tweeted disclaimers
eBay Inc. famously uses a set of four disclaimer tweets prior to “live-tweeting” its earnings calls (see screenshot below). These link to a more complete disclaimer on the company’s corporate blog and to the investor presentation that contains the GAAP reconciliations.
These four tweets precede eBay's live tweeting sessions. However, there's no assurance that people will see them.
While the company’s lawyers deserve credit for recognizing the potential legal pitfalls of using Twitter in this way, there is no assurance that investors will be aware of the disclaimer when they view individual tweets from the live session.
For example, investors who access the tweet shown below via a referral from a friend or from search results will not be cautioned about forward-looking statements as required for the company to claim safe harbor.
This forward-looking tweet is not accompanied by cautionary language.
How Twitter could add disclaimer links to tweets
The fundamental problem with current approaches to applying disclaimers or cautions to tweets is that people can view tweets in isolation from the disclaimers that apply to them.
To address this problem, Twitter could add a new “disclaimer” parameter that could appear below each tweet and link to a page containing a comprehensive disclaimer. This would be similar to the new “contributors” parameter that Twitter is currently testing for business accounts.
The new contributors link is meant to personalize business accounts managed by multiple people by showing which contributor wrote the tweet. Twitter itself is using the contributors link on its account, as shown in the following tweet.
Importantly, the contributors link is retained when tweets are re-tweeted on Twitter’s website (but not when the RT convention is used).
While I’m sure the contributors link is valuable to business users, I’m even more sure that a disclaimer link for tweets would be just as attractive, if not more so.
Companies that are currently sitting on the Twitter sidelines for legal reasons will have more confidence to use Twitter if they can reliably attach legal disclaimers to their tweets.
And the disclaimer feature is something worth paying for if it means avoiding costly litigation or regulatory action.
Here’s what a disclaimer link might look like:
Just a thought.
I founded IRWebReport.com in 2001. My company IR Web Reporting International, Inc. provides evaluations and audits of global large- and mega-cap companies’ online IR programs. I also consult for vendors and start-ups in the investor relations industry. View my bio and disclosures, join my network on LinkedIn, and follow me on Twitter @irwebreport.
