Emoji Context Matters When Judged by Courts and Regulators

Emojis are now ubiquitous, and have become the subject of court decisions and regulatory initiatives. The problem with applying legal principles to emojis , particularly by regulators like FINRA, is the difficulty of considering context of the emojis and the background of the sender and receiver.

Court Cases

Courts have recently gotten into the business of judging emojis. In Canada, the King’s Bench for Saskatchewan ruled June 8 on summary judgment that an “informed objective bystander would understand” that a thumbs-up emoji can represent a signature agreement to a contract.

The court applied this “objective” standard, despite the defendant’s affidavit where he claimed, “I did not have time to review the [contract] and merely wanted to indicate [with the thumb’s up] 👍 that I did receive his text message.”

A few months ago, the Southern District of New York judged a social media post promoting non-fungible tokens, which contained emojis. That court found “the ‘rocket ship’ emoji [🚀], ‘stock chart’ emoji [📈], and ‘money bags’ emoji [💰] objectively mean one thing: a financial return on investment.”

Courts have started to judge the use and meaning of emojis, and the Financial Industry Regulatory Authority, a government-authorized not-for-profit organization that oversees US broker-dealers, has also gotten into the act. At its national conference in May, FINRA staff announced that emojis in texts could be considered customer complaints, which are reportable to FINRA under Rule 4530. As an example, FINRA staff said that if a customer’s text about a recommendation contains a “very angry, upset emoji,” that text could be reportable to FINRA.

Under FINRA’s rules, firms are expected to “reasonably” supervise their businesses and they may use “risk-based” procedures when reviewing electronic communications. Thus, firms aren’t expected to review every single email or text. Instead, they may use lexicon-based reviews, random samples, or a combination. This system, developed for word-based communications, may not work for emojis.

Technology Matters

When firms use lexicon-based reviews, they are employing words and letters, such as “fraud,” “txt me,” or “liar.” With emojis, FINRA has never indicated that technology exists to review the nearly 3,500 emojis being used. And new emojis are regularly added to phones and computers; IOS 16.5 added 21 new emojis. Without sufficient technology, FINRA could be setting firms up to fail. How, for example, can a firm surveil for a particular “very angry, upset emoji” (which FINRA staff referenced during the annual conference)?

Sender and Recipient Matter

Words are often clear, regardless of who writes or receives them. For example, the phrase “You ripped me off” is unambiguous, whether the customer is 18 or 80. However, for emojis, ambiguity can come into play based on the age of the sender or recipient.

Among older generations, the thumbs up emoji means “good job” (and in Saskatchewan, according to the Canadian court, it means, “I concur with this contract.”) However, for Gen Z-ers, “it’s more of an insult than a positive sign” about “something you botched or even a ‘sure, whatever’ in response to something you’ve said.”

Thus, for firms to determine whether an emoji is a customer complaint, they may have to consider the age of the sender and the age of the recipient. FINRA hasn’t provided guidance to firms about how to do this, considering that firms’ procedures need only be reasonable.

Context Matters

When reviewing letters and words, the context is often clear. However, with emojis, the context can become muddled. For example, consider the following emojis:

Pleading Face 🥺 This emoji could be used to “let others know” that the sender is “upset or worried.” Thus, a customer could be expressing a problem with her representative. However, it could also be used “to convey a sense of care” and to “express support and adoration for someone else[.]” Thus, it could mean that a customer supports and is happy with their representative.

Fire 🔥 This emoji is often used when the sender is positively “psyched” about something. Therefore, a customer could use it to convey happiness with an investment recommendation. However, fires can also be used to convey a negative reaction, such as “You burned me!”

Loudly Crying Face 😭 This emoji has two diametrically opposed meanings. On the one hand, a customer could use it to “convey grief.” However, this emoji has also “overwhelmingly been used to share positivity,” which could mean that the customer is happy with an investment recommendation.

Shrugging Face 🤷‍♀️ (This is our interpretation of how supervisors and compliance officers may view the subject of this article.)

Outlook

In court cases, it may be appropriate to judge emojis because such cases may involve one or a small number of emojis, allowing the fact finder to conduct an in-depth review of the context, as well as interpretations offered by the sender and recipient. These factors may allow courts to apply an objective standard.

In contrast, broker-dealers engaged in “reasonably” reviewing thousands or millions of electronic communications by applying “risk-based” principles don’t have the luxury of parsing each emoji in the same manner as litigants or courts.

Therefore, before FINRA requires broker-dealers to apply unwritten and untested standards, FINRA staff may want to take a break 😎 and consult with firm management, compliance officers, and registered representatives about these issues. If the industry isn’t consulted, it’s easy to predict what will happen next 🤬.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Brian Rubin is co-chair of the securities enforcement practice at Eversheds Sutherland.