Noncompliance with marketing regulations continues to make headlines as regulatory agencies scrutinize misleading marketing practices across a wide range of industries, imposing strict penalties and fines on organizations who do not follow the rules.
In 2014, FTC enforcement left virtually no industry unscathed — for example, healthcare, manufacturing and chemicals, retail goods and services, and technology and energy, among others, were all under the microscope. According to the Consumer Financial Protection Bureau’s most recent supervision report, deceptive student loan debt collection practices, unfair and deceptive overdraft practices, mortgage origination violations, fair lending violations, and mishandled disputes by consumer reporting agencies were among some of the most hot button issues. These unlawful practices yielded $19.4 million in remediation, from July 2014 to December 2014 alone. And since January of this year, the CFPB has taken enforcement action against eight mortgage-related companies for deceptive mortgage marketing practices.
What does this mean for your company? As enforcement rules get stricter, companies have no choice but to ensure that how and what they are communicating to consumers follows the letter of the law. But in today’s world where control over your marketing messages is not absolute, this is no easy task.
First of all, violations happen for a variety of reasons — some of them intentional and some of them not. Think about the many advertisements that purposefully exaggerate the value of a product to acquire more customers. Other times, it is a matter of poor training or lack of knowledge on what crosses the line of legality. For example, in channels like a contact center, an agent may veer too far from the approved script to ensure conversation flow and cross a compliance line without even realizing it.
So how do companies do a better job of protecting themselves, their brands and their products from the watchful eye of federal regulators? Here are five tips for avoiding marketing compliance violations:
1. Have a comprehensive Compliance Management System (CMS) in place.
Staying on top of company and brand promotion across all channels of customer acquisition (i.e., digital, television, print, radio contact center, etc.) requires a detailed plan. Your CMS should include audit capabilities, a standard operating procedure for remediation of violations, and technology that uncovers potential violations early enough to reduce your risk and limit drawbacks. For example, at PerformLine, we offer our customers a comprehensive, online marketing oversight platform that monitors their compliance activities across multiple digital channels as well as contact centers to ensure full marketing compliance.
2.Separate church and state.
Marketing compliance cannot be the responsibility of your sales and marketing team. You need a dedicated compliance team, preferably with a chief compliance officer leading the team and reporting to the CEO or board of directors. Blurring the lines between sales and marketing and compliance teams inevitably leads to issues.
3. Make monitoring practices known.
It is important to inform all of your marketing partners, vendors and affiliates that they will be monitored 24/7 by both man and machine. If they know they are being monitored around the clock, it’s likely they will cut a few less corners.
4. Don’t wait for a violation to happen.
Don’t wait for an impending event to make an investment in compliance. Remember that it’s usually consumer complaints that trigger action from regulators. It’s easier and less expensive to get your house in order before the CFPB, FTC, FCC or Attorney Generals come knocking. An audit from a regulator is extremely expensive and can be crippling to business growth. Investing upfront in marketing compliance monitoring can prevent a much more devastating event from occurring.
5. Make compliance part of the culture.
Making compliance a top priority among your leadership will help employees realize that it is not an issue to be taken lightly. Ensuring that your marketing guidelines are clear and concise and acting swiftly when a violation occurs will help motivate employees to play close attention to whether they are following the rules.
Every company’s risk profile is different and can depend on the type of marketing channels being used and the degree to which companies rely on third-party partnerships. Regardless of who is delivering your marketing messages or how they are being disseminated, your company is ultimately responsible for adhering to all compliance laws and regulations. Taking control of your compliance practices and having the right checks and balances in place will significantly minimize your risk of compliance violations. When it comes to protecting the health and reputation of your company, complying with today’s marketing regulations is a “must do.”
