Can One Instant Message Cost you $1M?

The growing spectrum of communications used in business today leaves organizations with tough decisions as to what they will or will not archive. The majority know that they need to archive email and already have systems in place to do so. Archiving mobile and social communications is quickly becoming a best practice and is required by regulators. The “less formal” instant message, however, seems to be an area of confusion, leaving organizations asking if it’s really necessary to archive them. Could a failure to archive instant messages actually affect business? How exactly can instant message communications be managed and archived? This post answers these questions with a real world example of where archiving instant messages saved an organization by allowing them to produce the message as evidence in court, a rundown of existing regulations, and a guide for how to archive Skype for Business with Retain 4.2.

One IM Conversation, Millions of Dollars

A court case between CX Digital Media and Smoking Everywhere demonstrates just how critical it is to archive instant messages and the consequences that just one simple message can have.

CX and Smoking Everywhere entered into an agreement where CX would be paid for every referral that turned into a sale for up to 200 sales/day. It was signed and printed in contract, safely stored in each party’s archives.

A few days later, this seemingly innocent conversation happened between CX and Smoking Everywhere’s VP that changed everything:

CX, excited at having their limit revoked, went on to refer an average of 1,244 sales per day. Smoking Everywhere was shocked at the invoice for the month of August, which they failed to pay. Things got really interesting when their failure to pay the September invoice pushed CX to sue.

In court, Smoking Everywhere claimed that per the contract, they were only obligated to pay for 200 of the referrals each month. The case would have ended there, had CX not pulled the original IM conversation with the VP from their archives.

While the contract specifically voided oral alterations, the instant messages counted as electronic communication, holding the same weight as a written message. Imagine that! An innocent, informal instant messaging conversation held enough weight to alter a written contract, and, because CX was able to produce it, they won over a million dollars in the court case.

With the majority of businesses of all sizes using instant messaging, it’s an important component of a company’s communication spectrum. Sensitive and important data is moving from inboxes to chat boxes, where wait times are minimal and our addiction for fast and effective communication is fed. Having this information safely stored could be the difference between winning or losing in court. Archiving one small instant message could be the difference between a writing a check for a million dollars or keeping that money in the bank.

Instant Message Archiving Compliance Requirements

Missing electronic information can be dangerous not only for eDiscovery and court situations, but also for the fines and sanctions that regulators can impose.

A notice from NASD (FINRA) requires firms in the financial industry to treat instant messaging communications in the same manner as email – they must be archived and available for eDiscovery. The notice also specifically clarifies that although instant messaging lacks the same formality of email and other forms of communication, this does not exempt it from the same record keeping standards that apply to email, sms, social media, etc.

Here are four examples of companies who found this out the hard way:

These four incidents, three of them in the span of just four months, prove that regulators intend to enforce the regulation to archive of ALL electronic communication, including the informal instant message.

Rule 34 of the Federal Rules of Civil Procedure also holds that it is our legal duty to preserve all electronically stored information (read more about this here), which further proves that archiving instant messages is important for your organization to stay in compliance.

How to Archive Instant Messages and Avoid Risk

Retain’s 4.2 release enables instant message archiving for Skype for Business by simply downloading the update. That’s right, If you are a current customer using Retain to archive Office 365 or Exchange, you can start archiving your Skype for Business messages at no added cost. Just update your software to the Retain 4.2 release.

Because all Skype for Business messages are routed through Office 365 or Exchange, they can be pulled down and archived in Retain. There, they are indexed as Skype for Business messages and can be searched for eDiscovery, redacted, and exported for use in court, litigation, and/or audits. Retain also shows message threads and all attachments that are sent via instant message.

In addition to archiving instant messaging, we recommend that you implement communication policies that protect your organization. These policies can help avoid harmful situations and communications from your employees, such as approving a deal contrary to your contract via IM or using a private IM platform to conduct business. You could restrict your employees to using solely Skype for Business, where all their messages will be safely stored in Retain.


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