Regulators to Set Guidelines on FIs’ Social Media Activity (Jan. 24, 2013)
Jan. 24, 2013
With U.S. financial institutions increasingly using social media to market to and interact with consumers, federal regulators have set their sights on establishing guidelines for consumer protection and compliance over such channels. The Federal Financial Institutions Examinations Council (FFIEC) has issued a notice of proposed guidance and request for comment from the financial industry and public by March 25. The interagency council said it will review the input before formally issuing its supervisory guidance, which will set forth recommended social media policies for financial institutions and nonbank entities supervised by the Consumer Financial Protection Bureau (CFPB). Such policies are likely to include the establishment of social media risk management programs that enable companies to identify, measure and control the risks related to communicating with customers via social media. These programs should guide companies’ social-media related due diligence, employee training, oversight, and auditing and reporting processes, the FFIEC said.
“Given the increased usage of social media by financial services companies, the proposal comes as no surprise,” notes Margo Hirsch Strahlberg, Paybefore Legal contributing editor and associate at Bryan Cave LLP, where she specializes in electronic payments and nonbank financial services. “There is a real need to focus on internal policies and procedures to adequately address legal, compliance and reputational risks raised by social media activity,” Strahlberg tells Paybefore. “And banks should not be the only ones focused on this proposal,” she adds. “Nonbanks involved in offering prepaid products should start considering the risks associated with their social media activity now, even though the CFPB’s supervisory authority does not yet extend to most of them.”
