Over the past two years, the Federal Trade Commission’s targeting of the direct sales channel has become increasingly aggressive, and the channel may now be under the most intense regulatory and public scrutiny it has ever faced. Opponents appear to have taken a war footing, and what we collectively do now as an industry will determine the future of this great business model we love.
Meanwhile, the direct selling industry itself has migrated from in-person sales meetings and events toward more online and social media-based marketing. This massive change has brought significant challenges and increased risks to direct sales companies, especially with regard to brand and regulatory liability. As field members increasingly use the internet to promote their businesses, companies invite more risk from uncontrolled or unmonitored claims by the field—often to disastrous effect.
As a result, compliance officers continue to play the world’s largest game of whack-a-mole; retaining oversize compliance departments charged with constant Google searching in hope of finding anything afoul of corporate and legal guidelines. It is an expensive process, requiring immense effort and resources to be able to “catch” and review all online mentions. Even so, the tools often employed by companies are not capable of finding the real issues lurking in dark and distant corners of the internet.
Automated Compliance Monitoring
So, what is the answer? It’s three words: Automated Compliance Monitoring. These systems improve the largely manual compliance processes previously used to comply with government regulations and protect brands. With automated monitoring, a company’s internal team can shift from the manual and low-skill work into higher level strategy, policy development and field communications, which are the hallmark and strength of the best compliance professionals.
By enabling this approach, sophisticated tools are used to find information posted online in many different social channels (such as Facebook, Instagram, Twitter, LinkedIn, blogs, videos and more) as well as basic search results that are normally identified in the course of daily business. As a result, many items and updates posted outside of compliance guidelines can be dealt with immediately, whether using pre-approved “in-compliance” resolutions or directing
mid- to high-level issues to the correct compliance department person.
The Internet is a Big Place
It seems simple enough, but too often companies can underestimate the scope of monitoring the entire internet. Hits from the dozens of online and social media sites means potentially millions of data points that must be culled and converted into violations for the team to follow up. Every violation generates a case file; many case files generate an investigation; and ultimately outreach to the field member in order to resolve the case. Each case can mean a dozen hours invested in a resolution, which clearly shows how manual processing of compliance management is cost prohibitive.
Simply put, direct selling companies are vulnerable in the internet age. Many compliance policy violations go undetected and unenforced due to the overwhelming difficulty tracking all independent representative activities on the internet. Rogue violators can expose a company to public embarrassment, litigation and regulatory action.
Fertile Hunting Grounds for Law Enforcement
The internet and social media provide source material for law enforcement and consumer advocacy groups. An investigator may not receive many complaints to support an ongoing inquiry, but if he or she discovers dozens of YouTube videos about “how to become a millionaire” with your company, it may raise a red flag and spur further investigation.
Adequate monitoring requires more sophistication and resources than many companies can afford. Internal staff are often poorly trained in direct selling compliance guidelines and federal laws, which means they may overlook some problems and misunderstand others, resulting in serious consequences. Without the proper tools, staff can waste time and money while potentially exposing the company to future liability.
Companies should look for ways to identify, select and enforce comprehensive company policies while doing it in an affordable manner. Automated Compliance Monitoring can provide such an answer by ensuring that everybody within an organization complies with corporate policies, governing body guidelines and federal laws while also providing documentation of policy enforcement to regulators.
Keys to an Effective Compliance Monitoring Program
Automated Compliance Monitoring easily identifies, scores and flags violations across most internet properties and social media sites. To be effective, the system should capture any problematic online activity that could harm an organization’s brand by seeking out any online mention through the use a search process that far surpasses the depth of a regular search engine. And when the system encounters a mid- to low-level compliance issue, it should be responded to immediately and appropriately cataloged for easy review, follow-up, investigation and enforcement—providing a clear audit trail. A “triage” process should also be implemented to ensure that the riskiest violations are immediately expedited to a company’s compliance team for follow-up. Additionally, field representatives should be trained in best practices by seizing opportunities to check potential posts for improper claims before they even go public via mobile app and other social posting platforms.
Overall, this technology program should not only significantly reduce compliance costs, but the web-combing features should increase search efficacy. The training provided through this system should also promote professional, thorough and effective communication between internal staff and field members. While a trained field salesforce promotes preemptive compliance in order to reduce overall exposure, an experienced monitoring team can provide informed recommendations for alerting representatives to concerns working within a company’s existing compliance structure, and demonstrate the company’s dedication to best practices in compliance.
With the above facets of a solid compliance program in place, should a regulator or other interested party inquire into a company’s practices, a company can state that it uses the best available compliance services and technology.
A published author, accomplished technology consultant and sought-after speaker on topics of digital impact and direct selling, Jonathan Gilliam is the Founder & CEO of Momentum Factor, the leading provider of online compliance monitoring, online reputation management, and digital risk mitigation strategies for direct sellers.