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The Green SheetGreen Sheet

The Green Sheet Online Edition

April 27, 2009 • Issue 09:04:02

Legal ease
Payments and social networking:
A legal perspective

By Adam Atlas
Attorney at Law

As payments industry professionals, many of us find our friends and family tend to assume we are necessarily up to date on the latest Internet applications, portals and networks. This is not always the case.

But the writing is on the Web (so to speak) for payment professionals to familiarize themselves with the new ways in which people meet each other and sell to one another. Some already dated but noteworthy examples are LinkedIn, Facebook, YouTube, Twitter, Second Life, MySpace and all manner of blogs.

If you don't know what these sites are about, I suggest you google them and find out. The good old face-to-face sales pitch is not gone yet, and I don't think it will ever disappear. But it's fit and proper for payment professionals to get their feet wet on new alternatives to the old methods of meeting potential clients and partners.

Even if you have no interest in spending your free time on these sites, I believe it's important to get a taste of them so you know what your customers are doing with their free time.

Social networking through the Internet, which I'll call "i-networking," raises some interesting issues from a legal perspective. The purpose of this article is to highlight some of the legal issues for payment professionals as they go about i-networking.

Rules and name usage

Visa Inc. and MasterCard Worldwide have to think about more than business cards and letterhead when drafting rules on marketing merchant services. For example, if you use your Facebook wall to promote your merchant services channel, does that mean you have to change your Facebook user name to make some reference to your sponsoring bank?

My recommendation is to include some express disclosure in an obvious place on your wall for this kind of information. The definitive answer to this question should come from your sponsoring bank or processor.

I advise that you encourage your sponsoring bank to develop i-networking rules. Without a set of guidelines for this "parallel universe," there is a risk of conflict arising from two different, though well-meaning, interpretations of existing rules.


Remember that your ISO or merchant level salesperson (MLS) agreement likely has strict confidentiality language. It typically covers matters such as pricing. You can't just post all your buy rates on your LinkedIn profile.

Sales organizations need to monitor all information they disseminate over i-networking channels just like they monitor old-fashioned sales channels. The casual atmosphere in i-networking channels tempts users to loosen inhibitions and relax rules to which they might otherwise adhere.

Don't let this happen to you. If you are trolling around Facebook looking for merchant customers, remember you are still fulfilling the sales agent function that applies to you when you visit real-life appointments.

Site rules

All i-networking sites have terms and conditions for their use. Some of them prohibit commercial activity or seek to control it or direct it through specific channels.

Make sure the site terms and conditions conflict neither with rules that are binding on you nor with the business plan you have devised for the i-networking channel in which you will be active. You do not want to invest in rolling out a strategy for an i-networking channel only to discover the strategy has to be shut down by the site.

Permanent record

Most people know already that anything they do on the Internet can come back to haunt them, so this is probably obvious. But just in case, if you are not prepared to see your writing, audio or video on the cover of tomorrow's Wall Street Journal, don't post it anywhere on the Internet.

I-networking sites reveal a different side of people - their personal side - which is sometimes not part of what they want to share with customers, colleagues or employers. Remember, if you don't want to share something with everyone, don't share it on the Internet. It's shocking how many people neglect this important rule of marketing today.


As agents in the banking industry, merchant services sales organizations are, theoretically, held to a higher standard than sales channels in other businesses. This principle is put to the test in i-netwoking, where it is easy to take on multiple identities and confuse readers about who and where you really are.

Try to avoid these kinds of shenanigans; they create the risk of you being dishonest or being perceived as dishonest (which is just as bad). Please forgive me for preaching here, but I have seen too many sales organizations get burned by dishonest practices to not mention something on this topic.


As ISOs move their efforts into i-networking channels, more of their information, such as sales channels and affiliates, will be exposed to possible attack from competitors. As you advance your presence in i-networking, implement a correspondingly higher degree of security in your in-house systems, as well as in the channels themselves.

Paper is passé

This is a little off-topic, but while we are talking about new technologies, you might also consider reducing the amount of paper in your day-to-day work by using tablet PCs, handheld PCs and even some electronic contract formation services like ContractPal.

ContractPal allows you to form legally enforceable contracts that you prepare without anyone having to ever print a document. Wouldn't it be wonderful if every merchant agreement were executed through a service like that? We would probably save a few million trees a year.

An opportune time

Ten years ago people talked about paperless and virtual sales. Then it was mostly talk. Now it's reality with the perfect confluence of:

  • An economic downturn putting pressure on the cost of travel, relocation and printing
  • The popularity of i-networking for people young and old
  • The abundant supply of free i-networking channels

Have fun. Perhaps we'll cross paths in the i-networking world. And if you wish, subscribe to my Payments Law Blog at http://paymentslaw.blogspot.com. end of article

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, e-mail Adam Atlas, Attorney at Law, at atlas@adamatlas.com or call him at 514-842-0886.

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

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