SMS Compliance: Grasshopper’s Guide for Business Texting

Short Message Service (SMS) is a cost-effective channel for small businesses to reach, engage, and communicate with prospects and customers. Wireless carriers are introducing stricter regulations to protect consumer privacy as business texting grows in volume and popularity. Non-compliance with these legal requirements could result in penalties and blocked messages.

Let’s explore SMS compliance and what small business owners and entrepreneurs need to know to avoid legal and financial consequences.

SMS Compliance: An Overview

SMS allows users to exchange text messages between mobile devices. When sending messages to customers via SMS, businesses must follow specific rules and requirements established by mobile carriers (e.g., AT&T, Verizon, and T-Mobile) to protect consumers in the U.S. and Canada from spam and privacy issues.

Requirements include a registration process all businesses must complete to verify they are a legitimate business, and explain the types of messages they plan to send and how they’ll get consent from their customers (e.g., opt-in and opt-out mechanisms). There are also restrictions on certain types of content that must be followed in order to avoid fines or message blocking. 

Maintaining SMS compliance helps businesses avoid legal and financial ramifications (e.g., penalties), and ensure their messages are delivered. Meanwhile, the regulations empower consumers to control their privacy and reduce spam or irrelevant messages by managing their preferences with opt-out mechanisms.

SMS compliance covers a lot of ground. Businesses must understand what it entails and take the appropriate action – which differs slightly depending on whether you have a local (10DLC) or Toll-Free phone number. We’re here to help you fully leverage the benefits of SMS while staying compliant.

The Benefits of Text Messaging for Entrepreneurs

Complying with SMS regulations sounds like a lot of work. So why should you care? Business texting offers many benefits for entrepreneurs — here’s why you should use this channel:

• Many consumers prefer to interact with businesses via their mobile devices. Text messaging allows entrepreneurs to instantly reach their prospects and customers, no matter where they are.

• SMS offers a direct and immediate communication channel most suitable for conveying time-sensitive information, updates, or promotions.

• Text messages have an open rate of 95 to 99% (compared with email’s 20 to 30%), making it an ideal channel for real-time customer engagement.

• SMS allows you to add a personal touch to your messages and automate communications to free up your time without missing a beat.

Besides sharing offers and promotions to drive sales, you can use SMS to:

• Automate appointment confirmations and reminders to minimize no-shows.

• Provide responsive support to improve customer satisfaction, even on the go.

• Solicit feedback and conduct surveys to engage customers and gain market insights.

However, you must comply with various regulations to ensure carriers don’t block your messages. Here’s what you need to know.

What is 10DLC Registration?

10DLC stands for 10-digit longcode, a standard 10-digit phone number for sending Application-to-Person (A2P) text messages. At Grasshopper, we call this a “local” number. Local numbers allow businesses to send SMS to individual customers who have provided consent to receive messages, offering a regulated and efficient method for companies to communicate at scale while preserving consumer privacy.

As the volume of A2P messaging increased, wireless carriers recognized the potential for abuse or misuse of traditional 10 digital phone numbers designed for person-to-person communication. They introduced the 10DLC registration process to maintain a trusted and secure messaging environment with standardized protocols.

Why Is 10DLC Compliance Critical for Business Messaging?

10DLC regulations prevent the misuse of A2P messaging. The vetting process, which requires senders to register their phone numbers, ensures businesses using those numbers are legitimate entities and have implemented a process to obtain recipients’ consent. The rules help control spam and fraud in text messaging and enhance the trustworthiness of the communication channel. Fines for business owners can be as high as $10,000 per violation.

The system provides businesses with a scalable method to reach many prospects and customers simultaneously. It also improves deliverability (i.e., more people will see your messages) because carriers are much less likely to block messages from vetted 10DLC numbers — giving businesses a reliable infrastructure to support their long-term customer communication strategy.

Moreover, 10DLC supports two-way communication, enabling businesses to engage in interactive messaging with customers. You can leverage this popular channel for customer support, surveys, and other real-time exchanges. Furthermore, using a consistent phone number for customer communication helps you build trust and deliver a coherent user experience.

What is Toll-free Verification?

The toll-free verification process involves white-listing text messages from vetted toll-free numbers (TFNs) to reduce false-positive blocks and increase message deliverability. 

Carriers first introduced toll-free verification requirements in 2022 and have since tightened the requirements. As of January 31, 2024, businesses can’t send messages via a toll-free number until they’ve completed the verification process.

Like 10DLC registration, the toll-free verification process helps promote SMS as a trusted marketing and communication channel. You can verify your number for free, to lower the risk of your SMS messages being flagged as spam or blocked by carriers. 

Avoiding Prohibited Content in Your Messages

The Cellular Telecommunications and Internet Association (CTIA) established three levels of severity for guideline violations, each graded by the level of potential harm to consumers. A Severity Zero (Sev-0) violation is the most serious and can permanently terminate your ability to send text messages from your business phone number.

There are three tiers of Sev-0 violation:

• Tier 1: Phishing, smishing, and social engineering messages with a fine of $2,000 per violation.

• Tier 2: Illegal content with a fine of $1,000 per violation. Your message content must be legal under the U.S. federal law, in all 50 states, and Canada.

• Tier 3: SHAFT (sex, hate, alcohol, firearms, and tobacco) content with a fine of $500 per violation.

SHAFT regulations prohibit brands from sending content containing sex, hate, alcohol, firearms, or tobacco (including CBD). For example, you can’t include words like “alcohol,” “wine,” and “liquor” in your campaigns. The rules also ban messages with depictions of violence, profanity, and discriminatory speech.

Carriers may also prohibit messages promoting high-risk financial services, debt forgiveness, illegal substances, gambling, and work or investment opportunities. It’s critical to adhere to these rules to prevent mobile carriers from blocking your SMS messages.

SMS: An Essential Marketing and Communication Tool for Entrepreneurs

Business SMS is an ideal marketing tool for entrepreneurs who wear many hats. It offers the flexibility and control small businesses need to respond to customer inquiries, make the most out of their time and resources, and adapt their marketing messages on the fly. However, the consequences of violating the regulations could lead to devastating legal and financial consequences.

Therefore, it’s critical to stay current with the latest regulatory requirements to protect yourself and your business’s interests. Besides ensuring your content doesn’t fall into the Sev-0 violation category, you must register your business number, implement consent and opt-out mechanisms, and understand the limitations of SMS messaging.

Simplify Business SMS with Grasshopper

Navigating the fast-shifting SMS marketing landscape isn’t easy, but we’re here to help you simplify the process and minimize violation risks. You can start the registration or verification process directly from your Grasshopper admin center and check the status there as well. We also provide detailed guidelines on our support site to help you complete this process quickly.

Learn more about Grasshopper’s Business SMS service and start a free trial to see how we simplify SMS marketing for entrepreneurs and small businesses. And watch for future content with more info on the different aspects of SMS compliance and the registration process.