Momentum Factor White Paper - Automated Digital Compliance

White Paper – Importance of Automated Digital Compliance for Direct Sellers

by Jonathan Gilliam, Momentum Factor CEO

Introduction: Automated Digital Compliance Programs

Over the past decade, the direct selling industry 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 Networkers 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.

The Costs of Non-Compliance

Direct selling companies often spend millions of dollars annually to retain large compliance departments. However, the work of searching the Internet becomes a game of finding a needle in a haystack as department staff use Google to sort out violators. These teams continuously scour the Internet for any questionable mention of their company’s name – a method that is time inefficient, costly and decidedly ineffective.

Often this work is at odds with the corporate executive team, whose members sometimes treat independent representatives with more leniency. Some organizations, meanwhile, try taking a hardline approach by restricting their independent representatives from social posts or marketing, which can suppress initiative and enthusiasm in the field. This often results in representatives either shutting down (ceasing all marketing or relationship-building), or posting even more “creative” content by bending the rules in an effort to sell more successfully.

Other organizations follow a more “head-in-the-sand” approach – ignoring the problem altogether, or just doing the bare minimum to demonstrate effort. This approach is not only ineffective at stemming the tide of errant and illegal posts, but is actually dangerous. It is not only a company’s highest duty to protect itself from existential threats, but federal law does not accept a company’s excuse of ignorance as grounds for absolution. Organizations are required by law to keep track of the activities of all of their employees and independent representatives.

Automated Compliance Monitoring

Automated Compliance Monitoring improves the largely manual compliance processes previously used to comply with government regulations and protect their 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 new 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 all too often companies can underestimate the scope of monitoring the entire Internet. Raw hits from the dozens of online and social media sites means potentially millions of data points that must be culled and converted into incidents for the team to follow up. Every incident generates a case file, and 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 person-hours invested in a resolution, which clearly shows how manual processing of compliance management is cost prohibitive.

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