Because financial institutions use social media to market to consumers, facilitate new account applications and provide loan pricing, the Federal Financial Institutions Examination Council on Tuesday issued a notice and request for comment regarding guidance on the topic.
The proposed guidance will address the applicability of federal consumer protection and compliance laws, as well as social media policies for financial institutions and nonbank entities supervised by the Consumer Financial Protection Bureau. Comments are due in 60 days.
The 31-page proposal addresses how social media impacts compliance and legal risk, operational risk, reputational risk, and an increased risk of harm to consumers. While the agencies note that no additional regulations apply to social media, the relatively casual communication channels are not exempt from the rules, either.
According to the proposal, social media risk management programs should include a governance structure that includes how social media contributes to strategic goals, policies and procedures, third party due diligence, employee training, oversight, audit and compliance functions, and a reporting process.
The joint agency release said that social media posts trigger the same disclosures that other forms of marketing do. For example, a post that quotes a loan rate must include all required APR disclosures, or must provide a link that takes the consumer directly to the required information.
Institutions must also adhere to laws such as the Fair Debt Reporting Practices Act, which prohibits the use of social media to inappropriately contact consumers, their families or friends regarding a debt, or use social media to disclose the existence of the debt, harass or embarrass them.
Social media posts could also trigger the requirement to disclose the official NCUA deposit insurance advertising statement, the proposal said.
The release, in PDF format, can be viewed on the FFIEC’s website.