If you are worried about managing the risk in social media, one of the ways to learn about how to do that is to look at how others are doing it. You might be in an industry that is used to playing fast and loose with the rules. Social has been an emerging platform so the visibility to it from a risk perspective has been relatively low for a while. That is no longer the case in most industries. Between the FTC and the NLRB (US-centric) and other regulatory bodies, you are facing increasing oversight.
Generally, if you plan for the worst case scenario the simple problems will end up being just that, simple. If you are familiar with Six-Sigma training and audits that is really all that is there. Imagining how things can go wrong and looking at how to respond to them.
The most regulated industry here in the US concerning consumer messages is the financial services industry. Financial advisors are monitored and recorded, firm content is pre-approved and pre-filed and layers and layers of control is in place. All so that investors aren’t taken advantage of.
Learning from the persecuted
Trying to do social media authentically for financial advisors has been quite a challenge over the years. The Securities Industry and Financial Markets Association (SIFMA) has been instructive over the years in this space. Bringing together both practitioners of social in the financial advice community with experts from the platforms and regulators, they have helped educate.
If you aren’t watching what they are saying in this space, you are doing yourself a disservice. Why? The challenges that they are facing and overcoming now are the same ones that you will face later. What do you do for record-keeping today? Do you retain anything? While slow to embrace social, firms doing it have put in place controls and processes that would easily stand up to other regulatory schemes in my mind.
SIFMA just published the highlights from their latest meeting on social media in this industry and it is quite illuminating. They also provided links to three of the presentations which I want to summarize and comment on here.
The opening slide quotes from the Financial Industry Regulatory Authority’s (FINRA) recent notice 10-06 and outlines what is generally the principle behind all oversight (changing the wording a little, here):
- Protecting consumers from false or misleading claims
- Effective and appropriate supervision
- Maintaining flexibility to allow brands to communicate
The presentation goes and recounts some of the other sections of 10-06. While the slides are quite wordy, they are worthy of reading. You should be considering retention, retrieval and supervision issues within your activities. Beware of systematic limitations and back-up cycles so that things you want to go away are going away in a timely manner. Also pay attention to engaging on platforms you do not control (your FB page, for instance). FINRA doesn’t care if you control it or not. If you are talking on it, you should be retaining and supervising it.
They throw out bring your own device (BYOD) as an issue, but provide no actual guidance. If you are doing BYOD, beware the hidden costs as you salivate over the cost savings. Things like giving up control may not be worth it, though there are firms out there that can help you on that journey.
While tilted towards the financial advice industry it does provide some good guidance and background. I found it curious that they left out the first FTC guidance on endorsements and disclosures, though.
They do talk about the kerfuffle that was created back in January 2012 when it seemed like the SEC was saying that a “Like” was a testimonial under their guidance. This was weird, and has been talked about quite a bit. Unfortunately, after all the hand wringing and feedback, they haven’t come out with anything more than just a statement that they are still looking into it.
The other instructive portion of this presentation was the section on folks who engaged in social improperly. While not enlightening in their particulars they generally fall under the “trying to put one over” the consumer vein.
The presentation also mentions guidance that came out from the Federal Financial Institutions Examinations Council (FFIEC). This is another document you should be looking at. If you haven’t implemented any risk management on your social activities, this is a good place to start. A hard place to start, but a good one, nonetheless.
This was generally just a puff presentation, to be honest. The only practitioner was from Putnam Investments and they just presented the business case for social engagement in this space. The other panelists were platform representatives and a vendor. I generally find that what they talk about is fairly self-serving, and this presentation is much of that.
This industry has had the greatest growing pains. Instead of a fire, fire, aim, fire process which is what most of social engagement has been, they take a more measured approach. To make an analogy. Most of social is a “tell me what I can’t do” attitude. In financial advice it has been a “tell me what I can do.” In the latter the assumption is that nothing is allowed.
The leaders in the financial advice sector have taken very measured risks. If you implemented what they have done, while probably too restrictive for your own industry, you would be very well positioned concerning your own regulators. Learning from the persecuted now helps ensure that you won’t be persecuted sometime later.