"There's a way to do it better—find it." ~Thomas Edison
"Success is on the far side of failure." ~Thomas Watson Sr.
Does the title above accurately describe your professional style? Or that of your Team? Your Organization?
Why not?
Much has been written regarding the unfortunate passing of the iconic Steve Jobs. Does your own leadership experience and outlook embrace the passion for your Organization's mission that was evident as Steve Jobs spoke to those 2005 Stanford graduates? Do YOU fondly recall your own failings with the same enthusiasm that Steve Jobs exuded when describing his ouster from Apple ten years after its founding?
Are you failing enough? Are you encouraging your Team's members to fail more often?
The financial services industry continues to evolve at breakneck speed. Online bill payment, account aggregation, bank-to-bank online transfers are now "old" technologies. Single location institutions have launched mobile banking. As soon as your Public Relations Team can place a piece on the PRNewswire, a dozen other competitors or peers simultaneously issue similar independent press releases.
Despite infinite media attention and blogs devoted to the "rise of regulation amidst Dodd-Frank" and all of the other horror stories about "new fees" that abound, a select few of your competitors are conceiving, testing, retooling, retesting and preparing to launch tomorrow's customer-friendly product or service. What are YOU doing to lead your Organization to the front of that cadre? Is your Board of Directors inspired...or mired in risk aversion?
Every merger has an acquirer and an acquired (regardless of how the Communications Team attempts to portray it). Yesterday's mergers were often about growing the footprint, expanding the brand to new markets, leveraging complementary channels for optimizing profits and controlling redundant costs.
Is your Organization untamed? Are you confident enough in your professional Team to accord them a percentage of their time to be unruly enough to identify, develop and launch the products and services that will satisfy tomorrow's customers/members?
Your Organization, under your leadership, will either be the acquirer--or the acquired--in tomorrow's merger. You will either be seeking to acquire an institution through which your Organization can channel its innovative products, services and servant leaders to WOW! new customers/members...or you will be explaining to your employees why many of them will need to seek employment elsewhere?
YOU are the Leader that everyone in your Organization is looking up to. Are you the Leader that everyone in your Industry is looking up to and attempting to emulate?
If not, then perhaps it's time you moved out of the way to allow that Leader to emerge...that Leader who will ensure that your Organization and each of its fully-invested Teams become and remain: UNSTOPPABLE!
Showing posts with label brand. Show all posts
Showing posts with label brand. Show all posts
Monday, June 16, 2014
Monday, February 17, 2014
When Crisis Erupts: Surmount or Surrender?
“The easiest period in a crisis situation is actually the battle itself.
The most difficult is the period of indecision -- whether to fight or run away.
And the most dangerous period is the aftermath.
It is then, with all his resources spent and his guard down, that an individual must watch out for dulled reactions and faulty judgment.”
~Richard M. Nixon, 37th President of the United States
As a Chief Compliance & Ethics Officer, you know that the eventuality of crisis striking your organization is not a matter of “if”, but only of “when.” You spend your career crafting and implementing a governance system of policies & procedures, training, monitoring, and reporting whose value will ultimately be assessed in those moments and days following the crisis. Not all systems (nor all leaders) will survive the test.
Crisis will not politely schedule an appointment with you on a lazy afternoon, but will more likely descend upon you furiously, publicly and embarrassingly at the most inopportune of moments. Crisis will arrive in the guise of a viral tweet, a regulatory inquiry, or a criminal indictment. A loyal staffer will hesitantly summon you from a meeting into the hallway to advise you of the breaking news. And so begins the moment of decision.
As Compliance leaders we have trained our entire lives to guide and protect our organizations from harm. The very same principles that we have employed to prevent and mitigate risk will come into play when we must navigate our organization, its leadership and its board through and beyond the crisis. Decisive action that engenders trust must remain at the forefront of the response.
Thus, together we must continue to:
- Act ethically and decisively;
- Communicate frequently and transparently; and
- Modify practices appropriately.
Act ethically and decisively
Crisis does not represent your organization in its entirety. Your mission, your values, and your people remain fundamentally sound, even when something has gone awry. Therefore, even as you and your leadership team are undertaking an investigation and crafting a response to the statement, incident, or charge, you will continue to direct your employees to perform their day-to-day responsibilities with the accustomed level of adherence to ethics, compliance, and mission-focus. Your organization will survive the crisis, and so the continued service to your employees, clients, customers, vendors and shareholders must remain highly-functioning.
Communicate frequently and transparently
Do not compound the temporary negative impact of a crisis by shrouding the crisis in a cloak of shame and secrecy. While not proud of the event that has triggered the crisis, you remain nonetheless committed to your employees, your customers, your brand, and your mission-focus for the long run. Within that long view context, communicate quickly that leadership is:
· aware of the situation;
· taking it seriously;
· cooperating fully; and
· is committed to resolving it.
Convey that future communications will follow as additional information becomes available, and adhere to that pattern, even if only limited information becomes available. Your stakeholders are better served by hearing the truth from you, than the mistrust that will take root if they begin to receive their information—accurate or misconstrued--from external sources.
Modify practices appropriately
While some crises will end with a conclusion that the crisis was merely malicious and unwarranted, often the investigation will reveal a compliance or control weakness that must be addressed by your organization. Once identified, own both the root cause and the solution, communicating the same to your stakeholders. Then set to work implementing the required changes that will ensure the situation has been appropriately addressed. If additional training is warranted, then make every effort to involve the affected employees in designing and testing the training before it is rolled out to the larger audience. Schedule subsequent time to review the modified practice and test its effectiveness, regardless of whether required to do so by a regulatory body or not.
***
Crisis will erupt. You will be called upon to act in the best interest of your organization and its stakeholders. If you have prepared yourself, your leadership team, and your board in advance of this moment, then you will pilot your organization to a brighter tomorrow with the flag flying high. Otherwise, armed only with dulled reactions and faulty judgment, you will find yourself waving the flag of surrender.Thursday, October 17, 2013
Don’t make the wrong call!
Ensuring compliance with the Telemarketing Sales Rule (TSR) and Telephone Consumers Protection Act (TCPA)
* The FTC has long blazed a trail of consumer protection aimed at unscrupulous telemarketers.
* The FCC has strengthened its arsenal of weapons aimed at robocallers.
* Failure to incorporate the 2013 requirements can cost your company millions of dollars.
* Compliance Departments must engage all stakeholders in the organization.
* Building a compliant outbound calling & texting program will protect profits and the brand.
No longer can any sales and service organization naively believe that it will escape the notice of United States federal consumer protection regulators. If your organization uses a telephone to reach consumers, then the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) are two such agencies for which regulatory compliance professionals must maintain a watchful eye.
In conjunction with the robust outbound communication activities that our sales and service operations undertake, careless violations of FTC and FCC consumer communications laws garner sizeable financial penalties. To understand the impact of the October 2013 FCC amendments, it is helpful to review the FTC’s Telemarketing Sales Rule requirements.
FTC Telemarketing Sales Rule 2008 Amendments
The FTC administers the Telemarketing Sales Rule (TSR). Amended in 2008, the TSR governs outbound telephone calls initiated by a telemarketer, including those involving dialing technology (“autodialers”) and pre-recorded messages. As defined by the FTC:
• “Outbound telephone call” to mean a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution;
• “Telemarketer” means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor; and
• “Telemarketing” means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call.1
Some prerecorded messages still are permitted under these rules — for example, messages that are purely informational. That means a consumer may still receive calls to let him/her know a flight’s been cancelled, reminders about an appointment or messages about a delayed school opening. But the business doing the calling still isn’t allowed to promote the sale of any goods or services. Political calls, calls from certain healthcare providers and messages from a business contacting a consumer to collect a debt also are permitted. Prerecorded messages from banks, telephone carriers and charities also are exempt from these rules if the banks, carriers or charities make the calls themselves.2
While notifying consumers of a store address change is considered informational (thus not telemarketing), inviting them to a grand opening celebration at the new address could be considered part of a “plan, program or campaign” to induce the purchase of goods or services. That is, merely mentioning the grand opening could be the “hook” for a court or regulator to determine that the entire script is “telemarketing.”
The amended TSR expressly bars telemarketing calls that deliver prerecorded messages, unless a consumer previously has agreed to accept such calls from the seller.3 As a result, most businesses became required to obtain the consumer’s written permission before they could call a consumer with prerecorded telemarketing messages, or “robocalls”. In fact, a business has to make it clear it’s asking to call a consumer with these kinds of messages, and it can’t require a consumer to agree to the calls in order to get any goods or services. If the consumer initially agrees to receive robocalls, the consumer also retains the right to change his/her mind and rescind his/her opt-in.
The FTC takes enforcement of the TSR very seriously when it comes to robocall violators. A May 2013 FTC action resulted in a Department of Justice settlement4 resulting from an FTC-led complaint.5 Specifically, citing 16 C.F.R. § 310.4(b)(l )(v)(A), the Defendant company was permanently restrained and enjoined from engaging in, causing others to engage in, or assisting other persons to engage in:
A. Initiating any outbound telephone call that delivers a prerecorded message to induce the purchase of any good or service unless, prior to making any such call, the seller has obtained from the recipient of the call an express agreement, in writing, that:
1. the seller obtained only after a clear and conspicuous disclosure that the purpose of the agreement is to authorize the seller to place prerecorded calls to such person;
2. the seller obtained without requiring, directly or indirectly, that the agreement be executed as a condition of purchasing any good or service;
3. evidences the willingness of the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of a specific seller; and
4. includes such person’s telephone number and signature.
The Defendant was ordered to undergo federal compliance monitoring, extensive recordkeeping and detailed reporting for 10 years. Additionally, the settlement included judgment in the amount of $75,000 entered in favor of the FTC against Defendant as a civil penalty. The Defendant’s judgment was far more lenient that the $16,000 per call that the FTC is authorized to assess under the TSR.
FCC Telephone Consumer Protection Act 2012 Amendments
The FCC administers the Telephone Consumer Protection Act (TCPA). In alignment with the FTC position, revised FCC TCPA rules took effect on October 16, 2013 and require “prior express written consent” for pre-recorded telemarketing calls using autodialer technology made to both cell phones and land line phones. This rule change expressly amends the previous FCC rule which (1) had not required written consent; and (2) had allowed prerecorded telemarketing calls to land line phones where a business relationship existed.
The FCC has taken a very broad view of the use of autodialer technology. Although the rules provide a very specific definition of autodialer, regulators and the courts have interpreted the definition so broadly that any computerized dialing device could be viewed as an autodialer. It is advisable not to make non-consented calls to cellphones, unless your organization has an entirely manual process for initiating the call.
Misuse or misunderstanding the use of autodialer technology in the absence of receiving prior express written consent has expensive consequences. The TCPA has a private right of action and recent class action lawsuits have settled for tens of millions of dollars.6
Costly non-compliance
Non-compliance with the TSR and the TCPA exposes your organization to civil liability and regulatory sanctions and fines. At up to $1,500 per violation, non-compliance with the TCPA text message requirements alone could expose your organization to a sizeable civil judgment. A company that sends a mere 7,000 non-consented text messages could statutorily incur a fine in excess of ten million dollars.
This TCPA text message revision is anticipated to also invite predatory class action litigation as enterprising plaintiff attorneys seek to capitalize on the technical change to the law. Regulatory penalties and class action lawsuits give rise to negative publicity that have the potential to damage your organization’s profitability and its brand.
Build compliance into your outbound calling and texting programs
To address this potential reputational, regulatory, and legal risk exposure, compliance professionals should partner with the stakeholders in the organization who have a vested interest in outbound calling and texting programs. These stakeholder functions will likely include Sales, Marketing, E-Commerce, Call Centers, and Information Technology (yes, IT! They own the autodialer and messaging hardware and software your organization relies upon). And don’t forget those third-party service providers that may actually be managing your call lists, opt-ins, and outbound calling and texting programs.
Once you have marshaled your stakeholders, you will want to undertake:
(1) a review of existing outbound calling and texting programs, approval processes, and vendor contracts; and
(2) provide detailed guidance to management regarding required current changes and safeguards for current and future programs.
You will specifically want to address pre-recorded messages sent to both land line and cellular phones, as well as text messages sent to cellular phones.
Compliant pre-recorded messages
Your organization may call consumers who have provided written permission after being fully informed that they have expressly assented to receive prerecorded calls regarding your products and services. If your organization has not obtained such “prior express written consent” since October 16, 2013, you will want to solicit a revised affirmative written opt-in. Guidance interpreting the amended TCPA treatment of prerecorded calls suggests that a consumer must have the option to affirmatively check an unchecked box beside verbiage that explicitly and plainly explains that the consumer is opting into receiving prerecorded calls to his/her cell phone and/or land line phone.
A prerecorded message system must also adhere to the following opt-out language and activation safeguards:
• Businesses using robocalls are required by law to tell a consumer at the beginning of the message how to stop future calls, and must provide an automated opt-out the consumer can activate by voice or key press throughout the call.
• If the message could be left on voicemail or an answering machine, businesses also have to provide a toll-free number at the beginning of the message that will connect to an automated opt-out system the consumer can use any time.
Compliant text/SMS messages
Changes to existing text message marketing opt-in processes may be required at your organization to conform to the new “prior express written consent” standard. Recognizing that text messages are limited in character length, these changes should be customized for your purposes, but may resemble:
• New text/SMS enrollee receives: “Reply ‘AGREE’ to receive wkly XYZ Discount Alerts. Periodic msgs may be sent using autodialer. Consent not required for purchase. Msg&Data rates may apply” (to fulfill the FCC requirement of obtaining express written consent after the initial request is received AND that his/her consent is not required in conjunction with any other purchase)
• Once the consumer replies with ‘AGREE’, enrollee receives: “Thanks for confirming! You will receive weekly XYZ Discount Alerts! Stop reply ‘STOP XYZ’. Msg&Data rates may apply.” (to fulfill the FCC requirement of explicitly informing the requestor how he/she may rescind the opt-in)
Obtain new consent from current text/SMS subscribers
Your organization may currently have thousands (or hundreds of thousands) of subscribers. When the new rules took effect on October 16, 2013, all consent obtained under the old “prior express consent” standard were invalidated. When the FCC issued its revised rules in February 2012, the agency conveyed that once the new written consent rules became effective, companies would be required to obtain the revised “prior express written consent” before sending additional marketing messages. An established business relationship will also no longer relieve advertisers of prior written consent requirement after the effective date. You may thus seek to ensure that all current subscribers also receive the message inviting them to reply ‘AGREE’.
New text/SMS message marketing programs
These same FCC principles would apply to new text marketing programs that your organization may launch in the future. The FCC interprets “marketing” very broadly in its own favor, so you will want to ensure that your Compliance Department is involved at inception to review new text messaging programs.
Conclusion
As compliance professionals, we must daily balance our organization’s customer-focused mission with the consumer protection regulatory requirements. By taking swift action with your stakeholders now regarding the TSR and TCPA, you can reduce the risk that your organization will make the wrong call.
Notes
1 The Telemarketing Sales Rule, September 2009, http://www.consumer.ftc.gov/articles/0198-telemarketing-sales-rule.
2 Ibid.
3 FTC Issues Final Telemarketing Sales Rule Amendments Regarding Prerecorded Calls, August 19, 2008, http://www.ftc.gov/opa/2008/08/tsr.shtm.
4 United States of America v. Skyy Consulting, Inc., also d/b/a CallFire, a California corporation, United States District Court, Northern District of California, San Francisco Division, Case4:13-cv-02136-DMR, Document 3, Filed 05/13/13, http://www.ftc.gov/os/caselist/1223011/130514callfirestip.pdf.
5 United States of America v. Skyy Consulting, Inc., also d/b/a CallFire, a California corporation, United States District Court, Northern District of California, San Francisco Division, Case4:13-cv-02136-DMR, Complaint, Filed 05/09/13, http://www.ftc.gov/os/caselist/1223011/130514callfirecmpt.pdf.
6 Pari Najafi v. SLM Corporation, et al., United States District Court for the Southern District of California, Case No. 10-cv-0530 MMAAmended Settlement Agreement, October 7, 2011, http://www.manatt.com/uploadedFiles/Content/4_News_and_Events/Newsletters/AdvertisingLaw@manatt/Sallie%20Mae%20amended%20settlement%20agreement.pdf.
* The FTC has long blazed a trail of consumer protection aimed at unscrupulous telemarketers.
* The FCC has strengthened its arsenal of weapons aimed at robocallers.
* Failure to incorporate the 2013 requirements can cost your company millions of dollars.
* Compliance Departments must engage all stakeholders in the organization.
* Building a compliant outbound calling & texting program will protect profits and the brand.
No longer can any sales and service organization naively believe that it will escape the notice of United States federal consumer protection regulators. If your organization uses a telephone to reach consumers, then the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) are two such agencies for which regulatory compliance professionals must maintain a watchful eye.
In conjunction with the robust outbound communication activities that our sales and service operations undertake, careless violations of FTC and FCC consumer communications laws garner sizeable financial penalties. To understand the impact of the October 2013 FCC amendments, it is helpful to review the FTC’s Telemarketing Sales Rule requirements.
FTC Telemarketing Sales Rule 2008 Amendments
The FTC administers the Telemarketing Sales Rule (TSR). Amended in 2008, the TSR governs outbound telephone calls initiated by a telemarketer, including those involving dialing technology (“autodialers”) and pre-recorded messages. As defined by the FTC:
• “Outbound telephone call” to mean a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution;
• “Telemarketer” means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor; and
• “Telemarketing” means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call.1
Some prerecorded messages still are permitted under these rules — for example, messages that are purely informational. That means a consumer may still receive calls to let him/her know a flight’s been cancelled, reminders about an appointment or messages about a delayed school opening. But the business doing the calling still isn’t allowed to promote the sale of any goods or services. Political calls, calls from certain healthcare providers and messages from a business contacting a consumer to collect a debt also are permitted. Prerecorded messages from banks, telephone carriers and charities also are exempt from these rules if the banks, carriers or charities make the calls themselves.2
While notifying consumers of a store address change is considered informational (thus not telemarketing), inviting them to a grand opening celebration at the new address could be considered part of a “plan, program or campaign” to induce the purchase of goods or services. That is, merely mentioning the grand opening could be the “hook” for a court or regulator to determine that the entire script is “telemarketing.”
The amended TSR expressly bars telemarketing calls that deliver prerecorded messages, unless a consumer previously has agreed to accept such calls from the seller.3 As a result, most businesses became required to obtain the consumer’s written permission before they could call a consumer with prerecorded telemarketing messages, or “robocalls”. In fact, a business has to make it clear it’s asking to call a consumer with these kinds of messages, and it can’t require a consumer to agree to the calls in order to get any goods or services. If the consumer initially agrees to receive robocalls, the consumer also retains the right to change his/her mind and rescind his/her opt-in.
The FTC takes enforcement of the TSR very seriously when it comes to robocall violators. A May 2013 FTC action resulted in a Department of Justice settlement4 resulting from an FTC-led complaint.5 Specifically, citing 16 C.F.R. § 310.4(b)(l )(v)(A), the Defendant company was permanently restrained and enjoined from engaging in, causing others to engage in, or assisting other persons to engage in:
A. Initiating any outbound telephone call that delivers a prerecorded message to induce the purchase of any good or service unless, prior to making any such call, the seller has obtained from the recipient of the call an express agreement, in writing, that:
1. the seller obtained only after a clear and conspicuous disclosure that the purpose of the agreement is to authorize the seller to place prerecorded calls to such person;
2. the seller obtained without requiring, directly or indirectly, that the agreement be executed as a condition of purchasing any good or service;
3. evidences the willingness of the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of a specific seller; and
4. includes such person’s telephone number and signature.
The Defendant was ordered to undergo federal compliance monitoring, extensive recordkeeping and detailed reporting for 10 years. Additionally, the settlement included judgment in the amount of $75,000 entered in favor of the FTC against Defendant as a civil penalty. The Defendant’s judgment was far more lenient that the $16,000 per call that the FTC is authorized to assess under the TSR.
FCC Telephone Consumer Protection Act 2012 Amendments
The FCC administers the Telephone Consumer Protection Act (TCPA). In alignment with the FTC position, revised FCC TCPA rules took effect on October 16, 2013 and require “prior express written consent” for pre-recorded telemarketing calls using autodialer technology made to both cell phones and land line phones. This rule change expressly amends the previous FCC rule which (1) had not required written consent; and (2) had allowed prerecorded telemarketing calls to land line phones where a business relationship existed.
The FCC has taken a very broad view of the use of autodialer technology. Although the rules provide a very specific definition of autodialer, regulators and the courts have interpreted the definition so broadly that any computerized dialing device could be viewed as an autodialer. It is advisable not to make non-consented calls to cellphones, unless your organization has an entirely manual process for initiating the call.
Misuse or misunderstanding the use of autodialer technology in the absence of receiving prior express written consent has expensive consequences. The TCPA has a private right of action and recent class action lawsuits have settled for tens of millions of dollars.6
Costly non-compliance
Non-compliance with the TSR and the TCPA exposes your organization to civil liability and regulatory sanctions and fines. At up to $1,500 per violation, non-compliance with the TCPA text message requirements alone could expose your organization to a sizeable civil judgment. A company that sends a mere 7,000 non-consented text messages could statutorily incur a fine in excess of ten million dollars.
This TCPA text message revision is anticipated to also invite predatory class action litigation as enterprising plaintiff attorneys seek to capitalize on the technical change to the law. Regulatory penalties and class action lawsuits give rise to negative publicity that have the potential to damage your organization’s profitability and its brand.
Build compliance into your outbound calling and texting programs
To address this potential reputational, regulatory, and legal risk exposure, compliance professionals should partner with the stakeholders in the organization who have a vested interest in outbound calling and texting programs. These stakeholder functions will likely include Sales, Marketing, E-Commerce, Call Centers, and Information Technology (yes, IT! They own the autodialer and messaging hardware and software your organization relies upon). And don’t forget those third-party service providers that may actually be managing your call lists, opt-ins, and outbound calling and texting programs.
Once you have marshaled your stakeholders, you will want to undertake:
(1) a review of existing outbound calling and texting programs, approval processes, and vendor contracts; and
(2) provide detailed guidance to management regarding required current changes and safeguards for current and future programs.
You will specifically want to address pre-recorded messages sent to both land line and cellular phones, as well as text messages sent to cellular phones.
Compliant pre-recorded messages
Your organization may call consumers who have provided written permission after being fully informed that they have expressly assented to receive prerecorded calls regarding your products and services. If your organization has not obtained such “prior express written consent” since October 16, 2013, you will want to solicit a revised affirmative written opt-in. Guidance interpreting the amended TCPA treatment of prerecorded calls suggests that a consumer must have the option to affirmatively check an unchecked box beside verbiage that explicitly and plainly explains that the consumer is opting into receiving prerecorded calls to his/her cell phone and/or land line phone.
A prerecorded message system must also adhere to the following opt-out language and activation safeguards:
• Businesses using robocalls are required by law to tell a consumer at the beginning of the message how to stop future calls, and must provide an automated opt-out the consumer can activate by voice or key press throughout the call.
• If the message could be left on voicemail or an answering machine, businesses also have to provide a toll-free number at the beginning of the message that will connect to an automated opt-out system the consumer can use any time.
Compliant text/SMS messages
Changes to existing text message marketing opt-in processes may be required at your organization to conform to the new “prior express written consent” standard. Recognizing that text messages are limited in character length, these changes should be customized for your purposes, but may resemble:
• New text/SMS enrollee receives: “Reply ‘AGREE’ to receive wkly XYZ Discount Alerts. Periodic msgs may be sent using autodialer. Consent not required for purchase. Msg&Data rates may apply” (to fulfill the FCC requirement of obtaining express written consent after the initial request is received AND that his/her consent is not required in conjunction with any other purchase)
• Once the consumer replies with ‘AGREE’, enrollee receives: “Thanks for confirming! You will receive weekly XYZ Discount Alerts! Stop reply ‘STOP XYZ’. Msg&Data rates may apply.” (to fulfill the FCC requirement of explicitly informing the requestor how he/she may rescind the opt-in)
Obtain new consent from current text/SMS subscribers
Your organization may currently have thousands (or hundreds of thousands) of subscribers. When the new rules took effect on October 16, 2013, all consent obtained under the old “prior express consent” standard were invalidated. When the FCC issued its revised rules in February 2012, the agency conveyed that once the new written consent rules became effective, companies would be required to obtain the revised “prior express written consent” before sending additional marketing messages. An established business relationship will also no longer relieve advertisers of prior written consent requirement after the effective date. You may thus seek to ensure that all current subscribers also receive the message inviting them to reply ‘AGREE’.
New text/SMS message marketing programs
These same FCC principles would apply to new text marketing programs that your organization may launch in the future. The FCC interprets “marketing” very broadly in its own favor, so you will want to ensure that your Compliance Department is involved at inception to review new text messaging programs.
Conclusion
As compliance professionals, we must daily balance our organization’s customer-focused mission with the consumer protection regulatory requirements. By taking swift action with your stakeholders now regarding the TSR and TCPA, you can reduce the risk that your organization will make the wrong call.
Notes
1 The Telemarketing Sales Rule, September 2009, http://www.consumer.ftc.gov/articles/0198-telemarketing-sales-rule.
2 Ibid.
3 FTC Issues Final Telemarketing Sales Rule Amendments Regarding Prerecorded Calls, August 19, 2008, http://www.ftc.gov/opa/2008/08/tsr.shtm.
4 United States of America v. Skyy Consulting, Inc., also d/b/a CallFire, a California corporation, United States District Court, Northern District of California, San Francisco Division, Case4:13-cv-02136-DMR, Document 3, Filed 05/13/13, http://www.ftc.gov/os/caselist/1223011/130514callfirestip.pdf.
5 United States of America v. Skyy Consulting, Inc., also d/b/a CallFire, a California corporation, United States District Court, Northern District of California, San Francisco Division, Case4:13-cv-02136-DMR, Complaint, Filed 05/09/13, http://www.ftc.gov/os/caselist/1223011/130514callfirecmpt.pdf.
6 Pari Najafi v. SLM Corporation, et al., United States District Court for the Southern District of California, Case No. 10-cv-0530 MMAAmended Settlement Agreement, October 7, 2011, http://www.manatt.com/uploadedFiles/Content/4_News_and_Events/Newsletters/AdvertisingLaw@manatt/Sallie%20Mae%20amended%20settlement%20agreement.pdf.
Monday, February 18, 2013
An Invitation to Connect: The FFIEC Embraces Social Media Regulation
Financial Institutions in the United States have a new “friend” to contend with in their social media circle.
Given the exponential increase in the influence social media has had upon the financial institution landscape in recent years, compliance professionals could have anticipated the recent Federal Register notice. On January 23, 2013 the Federal Financial Institutions Examination Council (FFIEC), composed of the OCC, the Federal Reserve Board of Governors, the FDIC, the NCUA, the CFPB and the State Liaison Committee (“the Agencies”) jointly issued proposed guidance for public comments to be received by March 25, 2013.
This broad-based guidance proposes to address the applicability of federal consumer protection and compliance laws, regulations, and policies to activities conducted via social media by banks, savings associations, and credit unions, as well as by nonbank entities supervised by the Consumer Financial Protection Bureau.1 Viewed in the broader context of enterprise risk management, the Agencies are seeking to ensure that all supervised financial institutions are effectively assessing and managing risks associated with activities conducted via social media. Specifically, the financial institutions will be expected to incorporate consumer compliance and legal risks, as well as reputation and operational risks associated with social media activities into their governance structure.
The FFIEC’s entry into social media regulation will likely be met with mixed reviews by financial industry compliance professionals. While many organizations have sought to craft policies and procedures to address this multifaceted communication phenomenon, other organizations have struggled with developing a consensus around how to approach social media governance. For organizations that have yet to create or adequately revise social media policies and procedures to encompass its growing importance to commerce, the FFIEC action may provide the impetus that Chief Compliance Officers can leverage to guide corporate boards and C-suite executives to create a social media governance structure.
I read the proposed guidance with great interest. I had expected the FFIEC to provide guidance regarding a financial institution’s active use of social media in its business and by its employees, both in their capacity as employees as well as off-duty. The proposed guidance directly addresses the Compliance and Legal Risks posed by social media with regard to deposit and lending products, payment systems, anti-money laundering and financial privacy. The regulation of an active social media presence clearly reflects the consumer protection best practices that an organization would apply to its other outbound channels, including print, television, and radio marketing, as well as authorized corporate communications.
The portion of the proposed guidance that I found even more insightful was the Reputation Risk topics the FFIEC chose to explicitly consider. Some executives offer the opinion that if their organizations don’t actively foster a social media identity, then the need for social media governance is eliminated. The FFIEC instead acknowledges that even an organization that chooses to forgo promoting an active social media presence is subject to the risks that can be thrust upon an organization by the public. Noting that reputation risk is the risk arising from negative public opinion, the proposed guidance delves into the realm of dissatisfied consumers and negative publicity that can cause significant harm to a law-abiding financial institution. In addition to Fraud and Brand Identity and Third Party Concerns, the FFIEC directly addresses a financial institution’s affirmative obligation to monitor Consumer Complaints and Inquiries initiated via social media.
In an economy overflowing with consumers clamoring to ensure that “there’s an app for that,” financial institutions have worked actively to develop social media channels to harness consumer demand to varying degrees. Additionally, those same consumers who routinely update their social networks (both personal and professional) from their smartphones while waiting for the train or purchasing a latte’, will also launch a Twitter rant or a scathing and aptly-named blog post about your organization before they’ve left your premises. This proposed guidance, which will likely receive many comments before being issued in its final form, is going to eventually become part of your prudential regulator’s examination process.
I would propose that now is the time to address your organization’s social media governance process. Working with your board of directors and your senior leadership colleagues, you can assess the current status of your policies and procedures; identify and address perceived gaps; and provide appropriate guidance to employees within your organization before the regulators arrive to test your practices. Action now will likely ensure that your regulator hits the “Like” button later.
Wednesday, June 22, 2011
Embrace YOUR Gen Z Strategy
"We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive." -C. S. Lewis
"Progress lies not in enhancing what is, but in advancing toward what will be." -Khalil Gibran
Many organizations--perhaps YOURS--have increasingly been finding religion in "launching a Gen Y marketing strategy" over the past couple years. Really? Given the tens of thousands of advertisements that Gen Y had been exposed to over the past three decades, their consumer preferences for traditional products & services (YES, this includes financial institutions) were largely formed a decade or more ago. You are too late to that party unless you attracted them in the prior decade. You may not care YET about Gen Z because you're large, growing, financially stable, diversified, etc....but you WILL care when Gen Z mothballs you in cyberspace over the coming decade. But why?
As Spire Research & Consulting detail, Generation Z is comprised of approximately 1.8 billion consumers, comprising 26.57% of the population. Aged between 7-16 years old, Gen Z only knows a world built upon a mobile multi-channel platform. Extreme comfort with social networking technology and its inherent culture of transparency and immediacy represent the Gen Z lingua franca. They don't hear your radio ads or see your print advertisements about great auto loan rates, and while you may not think that's important because most of them cannot purchase a vehicle YET...your competitors who already buy ad space on Facebook or Google, and post relevant videos to YouTube have already built brand recognition with them. And, contrary to the conventional wisdom, Gen Z is brand loyal and are becoming increasingly bigger spenders than even Gen Y was at the comparative age.
Gen Z is communicating with one another 24/7/365. Good, bad or just plain dull, YOUR organization's service, employee behavior, decor, convenience, inconvenience, lack of web chat, lack of mobile banking, etc. will be posted to blogs, social networking sites, and streamed globally by the most enterprising of their members. As Galia Myron chronicles, the most common activities the teens described while blogging "were playing video games (65 percent); watching television (45 percent); doing homework (40 percent); going to music, dance, or martial arts lessons (38 percent); browsing the Internet (29 percent); and participating in faith-based activities (22 percent)." But pay particular attention that a large population of the teens were "apt to record feeling of boredom (65 percent)" while blogging, because if YOUR organization's social media presence remains bland and uninviting, you (and your target audience) could find yourself hearing all about it on Twitter, Facebook, and YouTube.
What is YOUR organization doing differently than YOUR competitors to differentiate yourself from the financial institution morass? Gen Z will bank with their parents' bank or credit union, but only if their members perceive a relevant relationship between the institution and themselves. You won't be able to simply count on the legacy effect.
Do you feature culturally relevant individuals and phrasing in your youth marketing efforts?
Do you adequately staff your social networking presence, or like many institutions do you give lip service to social networking, tossing an occasional lame blog post or tweet out there like a crumb to the masses?
Do you employ a member of Gen Z in an active advisory and communications role? Pick yourself up off the floor and give it some serious consideration...because YOUR competition already has that individual on their team.
Are YOU ready to embrace your Gen Z strategy...or will you simply continue to dress an old Gen Y marketing strategy in chic clothing and expect it to look like anything other than grandma in a mini-skirt...the numbers won't lie.
"Progress lies not in enhancing what is, but in advancing toward what will be." -Khalil Gibran
Many organizations--perhaps YOURS--have increasingly been finding religion in "launching a Gen Y marketing strategy" over the past couple years. Really? Given the tens of thousands of advertisements that Gen Y had been exposed to over the past three decades, their consumer preferences for traditional products & services (YES, this includes financial institutions) were largely formed a decade or more ago. You are too late to that party unless you attracted them in the prior decade. You may not care YET about Gen Z because you're large, growing, financially stable, diversified, etc....but you WILL care when Gen Z mothballs you in cyberspace over the coming decade. But why?
As Spire Research & Consulting detail, Generation Z is comprised of approximately 1.8 billion consumers, comprising 26.57% of the population. Aged between 7-16 years old, Gen Z only knows a world built upon a mobile multi-channel platform. Extreme comfort with social networking technology and its inherent culture of transparency and immediacy represent the Gen Z lingua franca. They don't hear your radio ads or see your print advertisements about great auto loan rates, and while you may not think that's important because most of them cannot purchase a vehicle YET...your competitors who already buy ad space on Facebook or Google, and post relevant videos to YouTube have already built brand recognition with them. And, contrary to the conventional wisdom, Gen Z is brand loyal and are becoming increasingly bigger spenders than even Gen Y was at the comparative age.
Gen Z is communicating with one another 24/7/365. Good, bad or just plain dull, YOUR organization's service, employee behavior, decor, convenience, inconvenience, lack of web chat, lack of mobile banking, etc. will be posted to blogs, social networking sites, and streamed globally by the most enterprising of their members. As Galia Myron chronicles, the most common activities the teens described while blogging "were playing video games (65 percent); watching television (45 percent); doing homework (40 percent); going to music, dance, or martial arts lessons (38 percent); browsing the Internet (29 percent); and participating in faith-based activities (22 percent)." But pay particular attention that a large population of the teens were "apt to record feeling of boredom (65 percent)" while blogging, because if YOUR organization's social media presence remains bland and uninviting, you (and your target audience) could find yourself hearing all about it on Twitter, Facebook, and YouTube.
What is YOUR organization doing differently than YOUR competitors to differentiate yourself from the financial institution morass? Gen Z will bank with their parents' bank or credit union, but only if their members perceive a relevant relationship between the institution and themselves. You won't be able to simply count on the legacy effect.
Do you feature culturally relevant individuals and phrasing in your youth marketing efforts?
Do you adequately staff your social networking presence, or like many institutions do you give lip service to social networking, tossing an occasional lame blog post or tweet out there like a crumb to the masses?
Do you employ a member of Gen Z in an active advisory and communications role? Pick yourself up off the floor and give it some serious consideration...because YOUR competition already has that individual on their team.
Are YOU ready to embrace your Gen Z strategy...or will you simply continue to dress an old Gen Y marketing strategy in chic clothing and expect it to look like anything other than grandma in a mini-skirt...the numbers won't lie.
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