Did you see the big social media news that broke Friday afternoon? Probably best to read up about how location-sharing site Blippy, which allows users to broadcast to their friends any and all of their credit card purchases, somehow managed to allow four users’ credit card numbers to slip through a public Google search.

This whole Blippy incident is an unbelievably epic fail, and frankly, not a good sign for the emerging, yet at times, controversial, location-sharing industry.

Here’s the explanation Blippy gave on its blog (from WSJ.com):

In a post on its blog, Blippy said the problem was “a lot less bad than it looks.” “While we take this very seriously and it is a headache for those involved (to whom we apologize and are contacting), it’s important to remember that you’re never responsible if someone uses your credit card without your permission,” the company wrote.

How is this problem possibly “a lot less bad than it looks”?  This site somehow allowed four of its users’ private credit-card numbers and sensitive information to leak onto the Internet for anyone to see and use. And even worse, they try to play it off by giving a limp response of, “it’s important to remember that you’re never responsible if someone uses your credit card without your permission.”

Give me a break! Any time your credit card information ends up anywhere other than in front of your eyes or a qualified and respected retailer, this is bad news. And the fact of the matter is that if this were not 2010, when social media and “privacy no longer exists” guru sites like Blippy are the darlings of the tech industry, or if this were a major retailer, this would be very troubling news for more than just the tech and social media industries.

What’s the biggest lesson marketers can take from this incident? Your brand is everywhere. It’s 24/7, and it even has a presence in the tiny nooks and crannies of the Web, such as a random Google search. All the more reason to always be cognizant of your brand’s reputation, the affinity of your customers to your brand and most importantly, what steps you are taking to successfully cultivate and build your brand.

Furthermore, your company’s response during both the good times and the bad is truly what sets the tone for your brand perception because it is often what people remember most. Even a small startup like Blippy should realize that customers, analysts, influencers, investors—you name it—they are always looking to the internal and external cues that emanate from your company to determine what value your brand has to them.

Perhaps PRNewser said it best Friday afternoon with its headline about this fiasco: Blippy Incident Shows Why Tech Startups Need An Organized PR Program

And my good buddy (and PRBC blogger)  Jeff Esposito had a very well-written and succinct response regarding the PR impact of situations like this, and why it’s so vital for any company—startup, social media site, etc.—to have a strong PR program in place before problems like this occur. Check out Jeff’s comments below from the PRNewser post.

This is a clear cut liability from a company that counts on tech glory and media coverage as good PR. This is a potential disaster that can lead to some lawsuits for these guys. Speaking of lawsuits:

“While it looks super-scary and certainly sucks for those few people who were affected, and is embarrassing to us, it’s a lot less bad than it looks.”

Can be used in court, but they also missed the point. Yeah it is an embarrassment, but at the same time you have lost your users trust and their sensitive private information. PR is not something that you can just wing, it’s something that you need, especially in times like this.

So, how should Blippy have handled all of this?

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