creating your text messaging policy · creating your text messaging policy ... benefits of texting,...

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A comprehensive guide for U.S. financial services firms

Creating Your Text Messaging Policy

© 2016 HE ARSAY SOCIAL , INC.

DISCLAIMER: This Texting Guide is for informational purposes for U.S. financial services firms only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of the information provided herein. References to the third-party sites provided are offered as a convenience to our readers and do not constitute an endorsement, recommendation, or guarantee of accuracy. We assume no liability for the content provided. Firms should consult their legal counsel before finalizing or distributing texting policies to employees.

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CONTENTS

Introduction

Defining Use CasesText Message Content Categories

Methods of Communication

Drafting Your Policy

About Hearsay Messages™

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In today’s digital, mobile era, the issue is not if financial services firms need to create a text messaging policy, but when they will do it.

Text messaging has become a crucial sales and marketing tool for advisors

who want to quickly communicate with prospects and clients. As advisors

run around during the day meeting clients, they’re often only carrying their

smartphone. By opening up this communication channel, you empower

advisors to use the tools they already have in the field to drive business

forward. And because texting is often reserved for close relationships,

texting has the added benefit of helping advisors build rapport and trust

with their clients.

However, opening up a new communication channel for advisors isn’t easy,

especially from a compliance standpoint. With regulators paying closer

attention to compliance infractions via text messaging, firms need to have

the proper supervision over their advisors’ activities on this channel. Similar

to opening up social media networks to your firm, in order to reap the full

benefits of texting, you must plan and account for compliance and legal

issues that could put your company at risk if left unchecked. As a first step,

your firm should establish a texting task force (similar to establishing a social

media task force). The texting task force should determine your company’s

texting strategy and policy, focusing on the intent of opening up this new

communication channel. As an example, is your firm trying to increase client

interaction, or have more organized communication in the field? Once

you have established intent of opening the texting channel, the next step

is to draft a policy. This guide will help your firm create a thoughtful and

comprehensive employee texting policy to prevent and address risks that

may plague your organization.

INTRODUCTION

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Once your policy is written—using simple language and clear examples—it’s

important to distribute the policy through as many company communication

channels as possible. For example, your firm might provide training sessions,

incorporate the policy into an employee handbook, or discuss the policy in

new employee orientation. You may even ask company executives to refer to

it at company meetings and in other appropriate forums to stress executive

support. You should train policy enforcers like HR or Legal on the proper

scope of monitoring and procedures for enforcing the texting policy.

Finally, remember that texting etiquette changes rapidly, as does guidance

put out by lawmakers and regulators. As a result, your policy should be a

living document subject to constant modification. Make sure your marketing,

legal, and compliance teams stay up-to-date on new developments. Learn

from your initial feedback. Revise your policy however often is appropriate

for your business, and make a point to review it once a year, at a minimum.

This guide addresses the content that should be included in your texting

policy, including a working document that instructs employees on how and

why to use texting, texting usage procedures, texting rules of engagement,

and the consequences of abuse. Use your policy as a reference for all

company employees and consider integrating it with other employee codes

of conduct and HR policies. Some organizations also require employees to

sign a yearly policy for their texting program.

4Creating Your Text Messaging Policy


Text messages are subject to the scrutiny of many different types of laws and regulatory agencies. Specifically, FINRA Rule 3110 requires member firms to have a system to supervise the activities of each registered representative, registered principal or other associated person, and that the system must be reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable FINRA rules. Additionally, FINRA Rule 3110 requires a broker-dealer to retain e-communications made by the firm and associated persons who relate to the firm’s business as such.

The Federal Communications Commission (FCC) oversees and protects consumers against unlawful practices of commercial text messaging. Various states also have passed consumer protection laws against voluminous text message campaigns. Because text messaging has a variety of different uses in business communications, it’s important to understand the types of activities your advisors can engage in so you can better tailor your text messaging policy.

A. Text Message Content CategoriesUnderstanding content categories for email and social media activity is fairly straightforward as those forms of communication are largely subject to false advertising and commercial spam laws as defined by the CAN-SPAM Act. While text message communications are considered spam, text messages themselves fall outside of the parameters of CAN-SPAM and are instead regulated within the scope of a myriad of state and federal consumer protection laws.

Most of these laws borrow from CAN-SPAM categories of “marketing” and “transactional” emails. Text messages are largely categorized as “telemarketing/advertisements” or “non-advertising/informational.” And similarly, within CAN-SPAM, text messages can be classified as both an advertising and informational message. Where there is mixed use, text messages that are motivated in part by the intent to sell property, goods, or services are, in most instances, considered advertisements. This is true even if the text message recipient is encouraged to purchase, rent, or invest in property, goods, or services as part of the message or in the future.

B. Methods of CommunicationThere are different ways to differentiate types of text messaging behaviors. Your firm must decide what type of technologies best support your preferred use case.

DEFINING USE CASES

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Short codes are typically shortened telephone numbers that can be used to address SMS messages. They are typically used because they are technologically the easiest mechanism to distribute information in a quick and efficient manner and require no real-time interaction. One-time messages (such as transaction confirmations, one-time coupons, etc.) can be sent through a short code and a consumer can send specific messages to a short code. Typically, the short code use case is used for non-personal or transactional activities.

Long code is a standard telephone number that is a source identifier that can be used to receive and maintain a dynamic conversation with a consumer. Long code texting is what most people are accustomed to communicate on a personal level.

The rules of texting engagement should be clearly visible in the policy. This promotes responsible behavior by your employees. Below are some content suggestions about what to include in your texting policy.

Help employees make a clear distinction between personal and business communications. If employees are soliciting business in any capacity or engaging with customers or prospects for business-related reasons, regulations in many industries require this activity and content to be supervised, captured and archived. FINRA, for example, uses the standards of “business as such” and “communications with the public” to determine whether financial firms’ supervision and archiving responsibilities kick in. Consider requiring employees to set up texting enablement through the existing office line, or require a new number to be issued for a mobile line to create a clear distinction between personal and professional texting. In all industries, texting communications can be considered business records that are discoverable. We believe that voluntary participation in texting programs for business use, and employers’ resulting supervision and retention of this texting data, is appropriate and indeed necessary in many regulated industries or for other legal requirements.

Understand your use cases. Given the different content categories, it is important to encourage behavior for approved use cases and create disincentives for employees from engaging in discouraged activities. For instance, a policy can contain rules that only permit advisors to use text messaging in order to maintain their relationship with clients.

DRAFTING YOUR POLICY



Convey support for texting use. A half-hearted approach to texting use will not generate the results you seek. When you set up your policy, communicate how much you value the business opportunities afforded by texting and the role your employees can play. Use positive language and examples to illustrate the uses and benefits of texting in layman’s terms.

Begin the texting policy with company values. A texting policy is an opportunity to reinforce company values and a sense of community within your organization. By starting your policy with company values, you will remind your employees of your brand promise and the appropriate tone and language to use on texting sites.

Communicate trust and goals. Formally acknowledge that the company is entrusting employees with its professional reputation, trade secrets, and other confidential information. Give examples of proprietary information that should not be shared by text.

Provide understanding of different text types. It is important to understand the difference between short code vs. long code texting capabilities. Depending on the model you support, communicate the associated State and Federal Consumer protection laws in your policy.

Consider different rules. Depending on your texting program goals, you should consider separate rule categories for different text types or use cases.

Field texting intent. It is worth evaluating how you will enable your field with texting capabilities and adjust your policy according to how it will be leveraged. Provide concrete examples of what is allowed and what is not allowed.

Understand the level of consent required to contact individuals. When conducting business communications via text message, rules may require consent between the consumer and employee to have certain conversations. For instance, customers who have a prior business relationship with the employee require a level of consent that is lower than a prospect. It is important to know and understand the type of consent that is required or your sanctioned use cases.

Record the consent. Once you have an understanding of the type of consent that is needed, make sure that there is a record of consent provided by the consumer. Even if consent can be obtained orally or can be implied by circumstance, ensure you have a corresponding record that demonstrates such consent was properly obtained.

Require integrity and honesty in marketing and advertising. Impress upon your employees that texting communicate is a reflection of the company and must be accurate. If you conduct business in a regulated industry, pay special attention to compliance requirements. Posts should not be created with the intention of manipulating consumers into buying, prospecting, or soliciting a service or product.

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Insist that posts and recommendations disclose any relevant relationship between recommenders and endorsers and the company. Financial incentives, especially, should be disclosed according to FTC Endorsement Guides.

Encourage your employees to set the context for their statements. Having your employees set the context for their texts can prevent your company from incurring costly regulatory fines.

Prohibit harassing and libelous statements. Employees who make disparaging, defamatory, or harassing statements can subject themselves and/or the company to liability. Include digestible definitions of defamation, libel, and harassment in your policy and trainings.

Provide rules and examples for text responses. Remind employees that they are an extension of the company’s brand. Clarify what kinds of questions they should respond to versus which issues should be forwarded to another specified department to resolve. Explain why employees should not respond with an unpleasant or retaliatory text if they see a negative text about them, the business, or brand. Besides potential legal consequences, studies have shown that defensive behavior reflects negatively on the brand no matter the wording used. Instead, encourage employees to respond with a customer-centric mentality. Demonstrate patience and offer an honest and concrete resolution to the problem.

Communicate the importance of protecting sensitive data and material information. Personally identifiable data should never be texted. Consult industry-specific laws on data security such as State privacy regulations, International Privacy Regulations, HIPAA, Gramm-Leach-Bliley, or SEC Regulation S-P. If your company is publicly traded, also beware the power of texting to divulge material information about a company’s value. Consult your legal team about the implications of Regulation FD (Reg FD) and Sarbanes-Oxley and texting of material non-public information. Securities laws violations could be triggered through texting if an advisor or agent shares material information with clients prior to its public dissemination (e.g. An advisor sends a text to a customer to invest in xyz corp as they are about to release good results).

Stress the importance of respecting intellectual property. Copyrights, trademarks, trade secrets, and other intellectual property best practices should be upheld in all texting forums. Encourage employees to cite, attribute, and link to their sources to give credit where credit is due. Set rules about accessing texting capabilities. Many Hearsay 360 customers create an explicit rule that any texting accounts used for business purposes must be divulged and linked to the Hearsay 360 platform. This allows you to keep appropriate records and consumer opt-in data to allow your employees to engage with customers and prospects.



Describe consequences for abuse of the policy itself. Listing consequences is tricky, as many corporate policies have recently been struck down by the National Labor Relations Board (NLRB), especially cases in which employees were terminated for breaking overly broad policies. Most of these policies included provisions about disciplinary action resulting from “harm to the company” or provisions telling employees to “avoid harming the company.”

Stress the permanency of texting content. Remind your employees that texting can be used as evidence in legal proceedings. Texts last in perpetuity. Evidence from texting has been used in murder trials, settlement discussions, binding policies, medical malpractice suits, sexual harassment claims, and other legal cases.

Special Considerations for Regulated IndustriesAdvertising regulated products or services. Many regulated industries, such as life insurance and securities, have strict rules prohibiting potentially misleading advertising language. For example, many states’ insurance laws provide keywords that cannot be used in life insurance advertisements (e.g. “guaranteed”,” free”, “limited time only”). Consider calling out words that should not be used in your policy and reviewing your corporate rules on advertising language in the context of texting.

Suitability of investment recommendations and products. It is suggested that any recommendation to buy or sell a security must be specific to each prospective investor to whom it is made. Consider that investment products, services, or valuations are difficult to discuss via texting in a compliant manner.

Regulation S-P. In addition to Regulation FD, financial institutions should also consult the SEC’s Regulation S-P, privacy rules under section 504 of the Gramm-Leach-Bliley Act. This regulation concerns the disclosure of nonpublic personal information about customers. Non-public information includes any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived without using any personally identifiable financial information that is not publicly available.

FINRA and other Regulatory Notices. FINRA and other regulatory bodies have outlined guidelines that require compliance and supervision for communication channels.

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Category

Archive & Recordkeeping

Supervision

Content Controls

Attestation

GovernanceResponse Rate Controls

Frequency Controls

Business Phone Number

Rules and Regulations

FINRA Rule 3110, FINRA Rule 2210, FINRA

Rule 2111, Advisers Act Rule 204-2 & 206(4)-7,

SEC Rule 17a-3, SEC Rule 17a-4

FINRA Rule 3110, FINRA Rule 2210, FINRA

Rule 2111, FINRA Regulatory Notice 07-59,

Anti-Spam Laws, Consumer Protection Laws

FINRA Regulatory Notice 07-59, Gramm-

Leach-Bliley Act (GLBA), SEC Reg. S-P,

Consumer Protection Laws, Anti-Spam Laws

Consumer Protection Laws, Privacy Laws

FINRA Rule 2210, Consumer Protection Laws

Consumer Protection Laws , FINRA Rule

2210, Anti-Spam Laws

Employee protection and Privacy Law,

Common Law



Text messaging is today’s most efficient way to communicate with clients.

With Hearsay Messages, firms can enable advisors to text with clients

while in compliance with company policy and industry regulations on any

company-approved or personal mobile device. The secure, efficient solution

makes it easy to separate personal and business communication on any

mobile phone, while providing enterprise-class supervision and record-

keeping controls that regulations require.

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