The Federal Financial Institutions Examination Council issued a supervisory guidance for financial institutions on Wednesday about risks involved with the use of social media.
“The use of social media to attract and interact with customers can impact a financial institution’s risk profile, including risk of harm to consumers, compliance and legal risks, operational risks and reputation risks. Increased risk can arise from poor due diligence, oversight, or control on the part of the financial institution,” the guidance said.
There are no new requirements imposed by the guidance for financial institutions. Instead, the agencies said the guidance was issued to help financial institutions understand the applicability of existing requirements and supervisory expectations related to social media use.
Among the recommendations from the agencies is the creation of a risk management program.
“A financial institution should have a risk management program that allows it to identify, measure, monitor, and control the risks related to social media. The size and complexity of the risk management program should be commensurate with the breadth of the financial institution’s involvement in this medium,” the guidance said.
“For instance, a financial institution that relies heavily on social media to attract and acquire new customers should have a more detailed program than one using social media only to a very limited extent.”
The regulators also said the requirements of the Equal Credit Opportunity Act, Regulation B and the Fair Housing Act apply in situations involving social media.
“Creditors must observe the time frames outlined under Regulation B for notifying applicants of the outcome of their applications or requesting additional information for incomplete applications, whether those applications are received via social media or through other channels,” said the guidance.
The rules outlined within the Truth in Lending Act and the Real Estate Settlement Procedures Act also apply to applications that are accepted electronically or through social media, the regulators said.