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This chapter reviews the capabilities of social networking tools and links those capabilities to recent legal and ethical controversies involving use of social networking tools such as Facebook and MySpace. A social cognitive moral framework is applied to explore and analyze the ethical issues present in these incidents. Three ethical vulnerabilities are identified in the use of social networking tools: 1) the medium provides a magnified forum for public humiliation or hazing, 2) a blurring of boundaries exists between private and public information on social networking sites, and 3) the medium merges individuals’ professional and non-professional identities. Prevalent legal and social responses to these kinds of incidents are considered and implications are suggested for encouraging responsible use. The chapter includes a description of the authors’ current research with preservice students involving an intervention whereby students read and think about real cases where educators use social networking. The intervention was created to improve students’ critical thinking about the ethical issues involved. Recommendations for applying institutional codes of conduct to ethical dilemmas involving online tools are discussed.