How Archiving Messages Can Protect Your Business from Legal and Regulatory Risks

People are communicating with each other at an unprecedented rate. Technological advancements mean that we can instantly communicate our every thought at the click of a button, and given that approximately 23 billion text messages are sent a day, we do clearly have a lot to say.

 

As we know, with great power comes great responsibility. Many businesses use text messaging for marketing purposes, to communicate with customers, and to discuss business matters internally. It is a very useful tool and has changed the communications landscape for many industries. At the same time, it has also made it easier for unethical and fraudulent activities to flourish, causing concern for industry watchdogs. As a result, the use of text messages commercially is strictly regulated and monitored by authorities in many countries.

 

In this blog, we will look at some of these regulations and explore how proper archiving practices can keep businesses safe from non-compliance. 

Understanding Text Messaging Compliance

There are a range of laws and sector regulations that govern how text messages can be used by businesses. These regulations are put in place to protect consumers, particularly from unfair or deceptive business practices and unwanted advertising. They also aim to make sure that personal information is not misused by companies.

 

Almost every country has some set of rules or guidelines that dictate the do’s and don’ts of using text messaging. In the US for example, there are both federal and state laws that companies must adhere to. 

Overview of Text Laws and Regulations at the Federal Level

At the federal level, there are several key laws that dictate text messaging compliance for businesses:

• Telephone Consumer Protection Act (TCPA): The TCPA focuses on telemarketing calls, including text messages. It specifies that consumers need to give written consent before being sent promotional texts. It also mandates that people have to be given clear opt-out mechanisms if they don’t want to continue receiving marketing material.
• CAN-SPAM Act: While this act focuses mainly on email communications, the CAN-SPAM Act also covers commercial text messages. It aims to eliminate spam messaging and ensure that consumers are only getting the communication they want. It requires businesses to keep accurate and up-to-date sender information and to provide clear opt-out options. It also compels businesses to follow through with opt-out requests and to keep Do Not Send lists.
• Federal Trade Commission (FTC) Guidelines: The FTC provides guidance on fair advertising practices and can take action against businesses engaging in deceptive or unfair practices through text messaging.

Variations in SMS Compliance Laws by State

In addition to these federal regulations, many states have their own laws that regulate text messaging. While there may not be a uniform set of laws across all states, there are some common themes and principles that echo the federal mandates:

• Consent: Many states require businesses to get an explicit ‘opt-in’ from consumers (ie prior explicit consent) before they can send any commercial text messages. 
• Opt-Out Mechanisms: Similarly, states often require businesses to give recipients a clear and simple opt-out mechanism, so they can stop receiving text messages at any time.
• Data Privacy: Some states have data privacy laws that require businesses to protect any personal data they collect (such as phone numbers, names, and addresses) and ensure that it is not accessed or used inappropriately. 
• Keeping Proper Records Certain states mandate that businesses have to retain records of text message communications for a defined period. These records can be inspected during regulatory audits.
• Fair and Transparent Practices: Many states have consumer protection and advertising laws that set out standards for text messaging communication to ensure fair advertising practices through text messaging.

In addition to federal and state laws, many sectors have their own specific regulations about how text messaging can be used in their industry. The financial sector is a good example of this, as they are known to have some of the strictest rules when it comes to using electronic messaging to conduct business. 

Archiving Messages in the Financial Sector

The financial sector operates in a highly regulated environment – which is necessary given how high risk it is and how much people have to lose when things go wrong. While technology has been an important part of growing the economy and creating a vibrant global marketplace, it has also been the source of deceptive and fraudulent activities. Financial regulatory bodies have an important, but difficult role, in ensuring the effective use of current and new technologies. Given its prevalence, text messaging is arguably one of the most challenging areas for them to regulate and monitor.

 

There are two key governing bodies that oversee the activities of companies in the financial sector –  the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC). Together they are a formidable force that  impose stringent rules on financial institutions, including how they can communicate with their clients through text messages. Both of these regulatory bodies have issued guidelines specific to electronic communications, including text messages that:

• Clarify that all forms of digital communication, including text messages, fall under the scope of books and records that need to be preserved. 
• State that financial firms have to keep accurate and complete records of all communications, including text messages, and they must be archived and easily accessible.  
• Specify that companies must have systems that allow them to monitor and supervise text messages internally in order to identify any violations of the rules. 
• Specify that companies must have clear policies and procedures related to communications conducted by employees on their personal devices and accounts. 

Non-compliance with text messaging regulations can have severe consequences for businesses. Legal and financial penalties may be imposed, leading to substantial monetary losses. Additionally, non-compliance can harm a company’s reputation and erode customer trust, resulting in long-term damage to the business.

How Text Message Archiving Works

Text message archiving involves capturing, retaining, and managing all electronic communications, including those casual yet crucial text messages, sent and received by an organization. The ultimate goal of a good archiving system is to create a centralized and secure repository of communication data that can be easily accessed and retrieved whenever the need arises. To work effectively and make sure that the company is sticking to SEC and FINRA rules, it should have the following components:

• Capture Data: An obvious starting point, but quite a complex one as it needs to  seamlessly integrate with all the different communication channels being used on both desktop and mobile devices, both personal and work ones. 
• Retention and Storage: Once messages are safely captured, they have to be saved in a secure archive database. 
• Indexing and Search: Finding one message among the mountain of retained data would be an impossible task without highly effective indexing and search mechanisms put in place from the outset. This means ensuring that the system retains important metadata for all messages. 
• Data Access and Security: An archiving system has to be as good at protecting data as it is at capturing it. It has to make sure that only people with the proper clearance can access the archived data and must create audit trails and activity logs so that access can be properly monitored.
• Message Preservation: The archiving solution has to make sure that all messages are preserved in their original form and must prevent any tampering with records. All the attachments and media files that go along with the messages must be kept too.

Ensuring Text Message Compliance 

Ensuring compliance with text messaging regulations requires a proactive approach that involves both developing the right policies and procedures and conducting regular employee training.

 

To lay a solid compliance foundation, businesses should establish clear and comprehensive text messaging policies. These policies should specify how employees are allowed to use text messages for both internal communication among employees and external communication with clients, customers, or investors. They need to be properly aligned with all statutory requirements and guidelines and should include all the rules discussed above.

 

However, having well-crafted policies alone is not enough. The efficacy of compliance lies in the hands of employees and relies on them being knowledgeable and diligent. To ensure that this is true, organizations should provide regular training on compliant messaging practices. Key components of employee training should include:

• Regulatory awareness.
• Review and explanation of the policy and related processes.
• Explanation of security measures and tools available to protect sensitive information.
• An outline of how text messaging is monitored and their responsibilities regarding reporting compliance concerns.
• A clear explanation of penalties and consequences of violating any of the rules. 

The Right Archiving System is Your Starting Point

It is clear to see that having the right communications management and archiving platform is really the only way to stay compliant with current laws and regulations about the commercial use of text messaging, particularly if you are in the financial sector. The rules are clear, but implementing them is complex and costly, and requires a strongly proactive approach. By using a robust archiving system, you can easily capture, retain, and manage all your electronic communications, and stay on the right side of regulatory bodies.

 

LeapXpert is a critical partner in the journey to full compliance. Our mobile communications platform maintains a complete record of all conversations between enterprise employees and customers to ensure that data privacy and governance standards are met. Integrated with leading third-party archiving, surveillance, and analytics platforms, all messaging records are securely stored and available alongside all the existing business data. Book a demo now.