Episode Description
This week’s COMPLY Podcast is part two of a conversation between our SVP of Sales John Zanzarella, and two heavy hitters in marketing compliance – Alexandra Megaris, Partner at Venable LLP, and John Henson, General Counsel at ConsumerAffairs.
If you haven’t listened to the first part of their conversation, we recommend you do that first, and then head back here to see how they wrap up their conversation with these topics:
- How to mitigate risk across marketing channels
- How to prioritize communication methods for compliance
- Regulatory hot topics and expectations for 2023
- How to share regulatory updates that affect the business with the appropriate teams
Show Notes:
- The State of Marketing Compliance Report: https://bit.ly/3LcF2un
- How to Navigate Marketing Compliance in 2023: Expert Insights: https://bit.ly/426siwn
- 5 Signs It’s Time to Invest in a Marketing Compliance Software: https://bit.ly/3NhORtC
- Connect with John Zanzarella: https://www.linkedin.com/in/johnzanzarella/
- Connect with Alexandra Megaris: https://www.linkedin.com/in/alexandra-megaris-6a018623/
- Connect with John Henson: https://www.linkedin.com/in/john-h-henson/
Subscribe to COMPLY: The Marketing Compliance Podcast
About COMPLY: The Marketing Compliance Podcast
The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level.
Episode Transcript:
Ashley:
Hey there COMPLY Podcast listeners, and welcome to this week’s episode. This week’s podcast is part two of a conversation between our SVP of Sales, John Zarella, and two heavy hitters in marketing compliance—Alexandra Megaris, Partner at Venable LLP, and John Henson, General Counsel at ConsumerAffairs. If you haven’t listened to the first part of their conversation, we recommend you do that first and then head back here to see how they wrap up their conversation with the following topics; how to mitigate risk across marketing channels, how to prioritize communication methods for compliance, regulatory hot topics and expectations for 2023, and how to share regulatory updates that affect the business with the appropriate teams. Thanks for listening and enjoy!
John Z:
With that I want to transition to one of the other things the report covered, and we talked a lot about this concept of omni-channel or marketing compliance monitoring, and the reason we talked about that is because that’s PerformLine’s business, right? We are an omni-channel sales and marketing monitoring solution. But one of the things that stood out was that omni-channel continues to grow. I think about four or five years ago we thought of social media monitoring as maybe just Facebook monitoring. And today within that one channel, there could be Facebook, Instagram, YouTube, Reddit, TikTok, and they continue to sort of come out and as ways that companies are communicating with consumers. But in the report it said 58% of organizations lack compliance, monitoring on at least one customer communication channel. John, I’ll start with you, why do you think that is? And how do you prioritize internally when you’re thinking of things like UDAAP or Truth In Lending, how to prioritize those communication methods?
John H:
It’s hard, especially in a business that moves fast, and the best way to do it again, I feel like John, you can just put me on repeat, right? You have to understand what the business is doing, and you have to meet with your marketing team regularly, you have to meet with your marketing heads regularly. I would say from a prioritization standpoint, for us specifically, we’re very focused on UDAAP as a whole, just period. And obviously as we get into other verticals, we’ll look at some of the other things as well, but like the number one drum I beat up the office is UDAAP. And as long as you have a good framework internally about how you as the compliance team thinks about UDAAP and how you can pass it along in a simple message to that team it makes that a lot easier.
John H:
There’s nothing better than being internal compliance and having someone repeat back what you said to you later. So, you know, we were going to do this, but we remembered that X, Y, and Z. Oh my God, like that’s the best thing ever. So prioritize UDAAP. I also am very, very interested in from a marketing channel, specific mix social, and specifically there how we’re marketing to who we’re marketing to. Are you doing a look-like audience in Facebook? Are we retargeting our prior customers? You know, all those questions have to be asked and have to be understood by the compliance team because that is an area of definite interest of mine as well as our regulators as well. So that, that’s kind of the two big prioritizations that I make.
John Z:
Yeah, that, that’s definitely helpful. And I think about sort of PerformLine’s evolution, we started as a web monitoring tool, and then based on client’s needs, we started monitoring calls, and then based on client needs, we moved into emails and social media. Alex, when you look at it and your counseling companies, do you think there’s any one of those areas that are more risk than the others? Or do you think they all sort of carry equal responsibility when it comes to something like UDAAP?
Alex M:
I mean, you can’t really isolate any more like a specific message and say that everything that is the cause of a UDAAP and everything else is therefore safe or not tainted. I mean, when you think about the way my clients and you all are marketing, it is all designed to be interconnected, right? I mean, you’re seeing messages and different formats. Ultimately you’re getting prompted to visit a website typically to make the purchase or the transaction. I mean, obviously there’s still brick and mortar and some telephone, but ultimately all the messages ultimately are getting you to take action. And so the way regulators look at it is everything that a consumer was exposed to during that that journey is fair game and disclosures need to be adequately made.
Alex M:
All the messages need to be accurate and substantiated and not misleading. You really can’t look at one media or channel in isolation. That said, I think anytime something’s new, or a new word, it’s harder to know exactly how the mistakes can happen, right? So I think by this point with email, how to craft a marketing email that’s compliant with the requirements with CAN-SPAM and in otherwise it’s pretty well known. But when you think about some of the newer channels for folks that are more in compliance and legal that don’t use the social media channels as much, it’s harder to kind of predict where the potential pitfalls will be, but everything has to be looked at together.
John Z:
Yeah, and the only thing I would add to that is just some organizations may be more focused on one area than another, and I think there are some ways to take a risk-based approach, but you’re right, Alex, that in general, the company has to be marching in the same direction when it comes to UDAAP. And I think in addition to the monitoring and making sure the disclosures are there and your agents on the phone aren’t saying anything that can be deemed as potentially deceitful, you also need to have a way that you can show that proof to leadership, to regulators, to individuals when it is asked for either on a state and federal level. And that’s something that we see, come up a lot with customers of ours who are just leveraging reporting and different tools to be able to have those communications.
John Z:
Alright, the last topic that we wanted to talk about today, and this is a big one, so I’m sure we’ll have a lot to share on it, is just around what are some of the top regulatory hot topics that people who were surveyed in the State of Marketing Compliance report found were really important to them. And we’re looking at both federal and state level regulatory changes. They’ve both been active lately, taking more aggressive approaches to consumer protection. It just feels to me when we’re in challenging macroeconomic times, the spotlight is even more important on making sure that consumers are protected and they’re getting marketed to accurately, especially when it comes to financial products. But we’ve seen the CFPB, the FTC, OCC, the states of New York and California all sort of increased scrutiny around topics like UDAAP and data privacy. And then there’s also been increased focus, and I know, John, you’ve talked a lot about this in some of your LinkedIn posts, around things like dark patterns and a relationship between a bank and a fintech in these Banking-as-a-Service partnerships. So at the most broad level, John, we’ll start with you. You know, what can we expect in 2023 from federal and state level perspective on some of those topics like UDAAP, data privacy, dark patterns?
John H:
I have said that my predictions are going to be reviews, it’s going to be a giant focus. ConsumerAffairs is essentially a review site, so we’re obviously really focused on that. I think there’s going to be some more dark pattern information coming out. I did not predict the CFPB’s mortgage loan comparison advisory opinion, which was pretty important for our industry. Then the other one that’s going to be very interesting over the next few months is the FCC’s guidance around TCPA and consent. But what’s interesting is when you look at, I’m going to go back to reviews and dark patterns for a second, and Alex, I’d love your opinion on this. Like we can call it whatever we want, that’s UDAAP, it’s UDAAP, right, like everything is UDAAP—everything. And I would a actually argue that you could, if you read the CFPB’s advisory opinion on the mortgage comparison shopping, there’s a lot of UDAAP in there too.
John H:
So that’s why that is constantly something that I hit home at ConsumerAffairs is everything is UDAAP. You have to understand what we’re telling people. You have to understand how consumers are seeing it. And what you think is best for the business is not best for the business if it causes you to have problems. So, you know, and I’ve said before, John, you’ve heard me say it before, like, tell the customer what you’re going to do and then do that. Like, that’s how you avoid UDAAP problems. You tell ’em exactly what’s going to happen and then that happens. And anything, if you fall outside of that, that’s going to cause you problems. And that’s regardless of reviews or dark patterns. And especially those two as we look as we think about the FTC, but Alex would love your opinion on this.
Alex M:
So customer reviews is top of my list too, because I think finally regulators understand how they’re being used by businesses. And maybe I think regulators have taken a little bit too far in terms of what they think an average customer understands when they see reviews and how they use that information. That said, I do think that the extent you’re trying to harness the power of customer feedback as a relatively cheap and organic way to promote whatever it is you sell, you need to do it in a way that is transparent, right? And so some of the earlier cases that the FTC has brought that actually I have worked on were pretty cutting edge in terms of you used to cherry picked reviews on a website, where the only reviews that are highlighted are a handful and they’re all positive, right?
Alex M:
Like we all were used to that in analog, now you’re able to get thousands and tens of thousands of reviews for every single transaction or interaction even, you don’t have to buy something to get a prompt to submit a review for something. So the technology allows you to take so much information. And so as a result, when you’re presenting that on your websites as, and it looks like it’s comprehensive, it better be comprehensive. And so allowing the negatives, not just the positives and having most importantly a objective set of criteria when you are deciding what to publish on your website, because not everything should be published, right? And that’s, and that’s something that actually was not easy to convince the regulators that there should be ability to moderate what is put up on on a website.
Alex M:
I think that’s where technology like what PerformLine offers is great because having someone to manually go through that is expensive. It’s not realistic, it’s not a good use of resources, but you can definitely, you know, have crawls and looking, you know, for, for finding things that, you know, need to be taken down or, or put up. Second, with about the dark patterns, I completely agree with John. At the end of the day, it’s just, it’s gotta be deceptive or unfair in order for it to be illegal. So just slapping the term dark pattern on something doesn’t make it illegal. It makes it sexy and interesting to talk about. It’s a great and it connects with some part of the design world that their whole existence is figuring out how to optimize an experience a digital experience.
Alex M:
But it needs to still meet the test of what is considered deception or unfairness under the law in order for it to be illegal. And you should be looking at these design features on your apps and website through those lenses, that has not changed. What’s changed I think finally regulators are understanding that because we’re interacting with brands in so many ways it does need to be looked at holistically. There’s a lot of rhetoric from the FTC and CFPB on dark patterns, there’s only been a few cases. And when you look at what the rhetoric is and what the cases are, there’s a huge discrepancy. You know, you read the rhetoric and it’s like everything is illegal, right? Everything’s a dark pattern.
Alex M:
When you look at the actual cases that they’ve brought it goes back to the fundamentals. But one of the bigger ones they brought was against one of the credit bureaus and now it’s in litigation. But basically the digital ads that were being served were about getting your free credit score, which everyone wants, right? That’s obviously a very appealing call to action, but when you actually finally clicked on it and were taken to all the pages, you actually were subscribing to a monitoring product and not just getting your credit score. And so you could see how that could easily happen where you have different people in a marketing team that ones that are responsible for the ads that are being served, and the ones that are responsible for taking the people that end up on the website and moving them through the various webpages.
Alex M:
And it’s an opportunity to sell the monitoring product that has a monthly fee that you have to enroll and you have to cancel out of to stop paying. And so anything that’s on a continuity basis is going to get more scrutiny under like a dark patterns analysis. Anything that the initial, the top of the funnel that got the consumer to interact with you, if that messaging is different than ultimately what they’re being offered that’s going to receive a lot of scrutiny. And I think everything else we’re going to have to wait and see. I mean there’s a lot of talk about countdown clocks and shame confirming where it’s like, are you sure you don’t want to buy this, right? Or where it’s like 15,000 other people just bought this, you know, insurance for your airline ticket, you sure you don’t want to buy it?
Alex M:
Ultimately, whether or not regulators start bringing actions for those types of marketing gimmicks is remains to be seen. But there are definitely things that companies are doing that are clearly deceptive that should be on notice now need to be looked at. And what I always tell my clients is, if you’re going to build a website or an app, at least have one person with a lens towards compliance or legal look at it, not just having the user experience team build these apps and websites for you. They don’t fully understand what they’re looking for. They want to optimize. And the whole point of these regulations that disclosures is to add friction, whereas at UserX person’s job is to remove friction and those two things are fundamentally at odds with each other.
Alex M:
I had a user experience come to a panel I did on dark patterns and he said my job is to optimize the consumer’s experience on the app. If someone told me that this disclosure needs to be up, I’m not going to not put it up, of course I’m going to do it, but I need to be told that it needs to be there. Because otherwise I’m going to see it as friction. It is as a non-positive experience for the customer. And so you need to really partner with the design folks not just the ones that are writing copy, right, like that are de building the sites and apps, which is kind of a new thing.
John Z:
Yeah, that’s a really interesting point, Alex and going back John, to what you’ve been talking about the whole webinar around understanding the business, communicating with the business. I’m just curious, so take something like the upcoming FTC guidance on TCPA, when something like that comes out, what is your process for sort of digesting that information? And then are you bullet pointing that for leadership? Are you sort of sharing information internally maybe with marketing or with the user experience team as regulations come up that you think affect that part of the business?
John H:
Yeah, so I have a standard email that I send out, it’s usually three to four bullets. Here’s what you need to know, and then it says further discussion below, right? And then actually for the FCC thing, I did an additional like PowerPoint with screenshots of our current experience and then saying like here’s what we’re currently doing. I mean, full disclosure, you can go on our site, we have a link to a brand page and our consent disclosure, right? And there’s lots of reasons for that. We can get into that, but we have it, right? And I said, here’s suggestions on how to change that in the future if we want to. And everybody knows when I send it like that is suggestions with roughly 35 minutes worth of thought into it and happy to discuss further and like reiterate it, but like, these are possible solutions to this, right?
John H:
Especially on something like that, it’s not a significant problem for us, I’ll be honest to say that because of the nature of our business, the size of our business, not a significant problem. We can work around it. But I knew that there was going to be so much rhetoric around it that, especially in our industry, that people are going to be setting their hair on fire about how it’s going to kill the industry and all that. That like I wanted our team to know this could be a problem, here’s some ideas around it, I’m not married to any of them, but like we can figure this out and it’s not nearly as bad as you think. It’s so I think it’s knowing your executive team too, and who your audience in general of who you’re talking to and a, how they digest information. And b, you don’t want to be the person who just presents problems, right? Especially when you’re in-house, because that is going to negate every bit of goodwill you ever have, right?
John Z:
And I think what you’re doing, John, is probably a good lesson for a lot of people. It’s taking a more proactive approach to compliance so that you’re not reactively coming to them with a problem, you’re educating them before there’s a potential problem and sort of explaining, hey, here are the outcomes or the directions that I recommend. And not everything’s going to require immediate action for every business, but the fact that everyone can be on the same page about it will go a long way, especially in a year where I don’t think a lot of companies want surprises, especially when it comes to ones that could, have a cost associated with them or regulatory or brand compliance issues. So with that being said, I will give you both an opportunity to share any last thoughts with the audience today. That was a fast 45 minutes. Alex, you want to go first?
Alex M:
Sure. I guess what I would just say as a takeaway is try to leverage as much of your outside advisors and other resources that allow you to either automate some of the compliance tasks on your plate or that get you the information you need to arm your the business with, so that they have a sense of what they should be prioritizing. And you know, as John said for those of you that are our compliance professionals learning how to talk to the people that are consuming your information is really important. And I think outside lawyers are not the best at doing that, but it’s something that I very much make it a point to do because just putting out the information if it’s not going to be absorbed is not doing anything. And so there is definitely a way to communicate in a style that will make sense for your organization and finding it is really going to be a key for you to be successful.
John Z:
Awesome. Thanks Alex. How about you John?
John H:
Yeah. You know, John, thank you for this opportunity. Alex, thank you for doing this as well cause it’s been great to hear from you. I would say again, like you have to understand your business, that’s number one. You have to understand what the business is doing. And that’s the one I think, again, to reiterate what Alex just said, like communication is absolutely key. We have all worked with attorneys or compliance people who knew their stuff forwards and backwards, and you never wanted that person in front of the client or the business because it would follow in deaf ears because their presentation style is simple, right? So don’t be that person. It’s really easy to build those relationships to communicate better if you’re taking care of the first part of understanding the business in a non-judgmental way. Just really just understand the business and how it works and that’s how you build those relationships and understand those communication styles that, and everything is UDAAP.
John Z:
Yeah, that’s right, everything is UDAAP, very well said, John. Well, as you know, you can find more from Alex and her team on the Venable blog or there a newsletter and more from John on LinkedIn. Thank you both so much for your time today.
Ashley:
Thanks for listening to this episode of the COMPLY podcast. Many of the key topics of discussion today are highlighted in our annual State of Marketing Compliance report, which I will drop for you in today’s show notes. We also created a blog that highlights the key takeaways from this conversation that I’ll share. And finally, if while listening to this, you realize you may need help automating and scaling your marketing compliance program, I’m also going to include a piece titled, “Five Signs It’s Time to Invest in a Marketing Compliance Software.” As always for the latest content on all things marketing compliance, you can head to performline.com/resources. Thanks again for listening and we’ll see you next time.
Rhonda McGill 
Gianna Kennedy