By Adam Atlas
Attorney at Law
Where business goes, so go ISOs and merchant level salespeople (MLSs). Today, businesses are making social media the cornerstone of marketing channels, as well as a means of communicating with customers and agents. Each business has its own approach to the new channels.
From a legal perspective, social media raise issues of concern to the payments industry's feet on the street. The purpose of this article is to highlight a few of those issues.
For example, an ISO should identify itself on social media using its registered name, giving credit to its sponsoring bank or processor - as required under the applicable rules. Instead of using a Twitter name such as @CreditCardGuy, an ISO whose name is Acme Merchant Services would be better off using @AcmeMerchantServices. Be careful not to slip into believing the casual atmosphere of social networking somehow removes it from the general application of our industry's rules.
However, remember that processors would rather not have their pricing posted hither and yon throughout the Internet, as that would interfere with the normal solicitation process by various ISOs of the processor. Social networking probably best serves to generate leads for a given ISO or MLS, with that individual following up on those leads to pursue accounts through the ordinary solicitation process.
This is obviously a challenging issue because ISOs are trying to strike a balance between being accessible on the one hand and preserving a hold on their teams on the other hand. One way to address this issue is to have your sales organization manage its social media presence as a team, rather than on a segregated basis with each MLS having his or her own online presence.
For example, if you have 15 agents, they don't all have to have their own individual Facebook accounts related to your business. Instead, the business can have a single Facebook account that a handful of agents will administer.
Those administrators will distribute to the broader group of MLSs the leads generated by social networking. This approach is advantageous because it also allows the ISO to create a more consistent social networking identity and have a greater expectation of remaining within the parameters of the rules.
As a general rule, an electronic contract - for which the parties have been authenticated and an electronic record of the contract has been created and is accessible to the parties - will have the same general legal effect on the parties as a paper version. This general rule, which has some exceptions, is in place thanks to the federal Electronic Signatures in Global and National Commerce Act of 2000, also known as E-Sign.
Expect a general shift toward paperless signup. This is happening not because the banks have taken the lead; it is happening because merchants, especially younger ones, perceive paperless to be the norm. Fortunately, the fact of a contract being paperless need not interfere with the general sales cycle or the general structure by which ISOs and MLSs recruit new merchants.
To make the best of the contemporary marketplace, establish a presence in social media. But take precautions in order to remain compliant and protect your interests in this new territory for our industry.
In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If you require legal advice or other expert assistance, seek the services of a competent professional. For further information on this article, email Adam Atlas, Attorney at Law, at email@example.com or call him at 514-842-0886.
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