Episode 70: Beyond Deregulation: Addressing Current Marketing Compliance Risks Pt. 1
While federal regulators may be pulling back, the scrutiny on consumer protection is only growing. Join Rhonda McGill, Sr. Director of Customer Marketing here at PerformLine as she dives in on this subject with attorney’s Ellen Berge and Jonathan Pompan both of Venable and they share their insights on how shifts at the federal and state levels, coupled with rising enforcement, are reshaping the risk landscape.
In this two part series, we will discuss:
- What shifting state and federal priorities mean for your strategy
- Auto-renewals, subscriptions, and the rise in complaints
- Third-party risk and the most underestimated risks in these relationships
- Being proactive with compliance by driving innovation in a deregulatory climate
- The compliance ROI and making the business case for trust, protection, and growth
Show Notes:
- Connect with Rhonda: https://www.linkedin.com/in/rhonda-mcgill/
- Connect with Ellen: https://www.linkedin.com/in/etberge/
- Connect with Jonathan: https://www.linkedin.com/in/jonathan-pompan-43535935/
- Beyond Deregulation: Addressing Current Marketing Compliance Risks: https://comply.performline.com/webinar/beyond-deregulation
- Subscribe to PerformLine to stay connected to resources and updates: https://lp.performline.com/subscribe-to-performline
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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:
Rhonda:
Hey, There COMPLY, podcast listeners and welcome to this week’s episode. Today I’m sharing highlights from our most recent comply webinar where I did a deep dive into the current regulatory environment with Venable attorney’s, Ellen Berge and Jonathan Pompan. In this first episode, we discuss the fact that consumer protection is still in play in many ways and why it is not the time to take your foot off the gas when monitoring your consumer facing marketing.
We’ll also touch on the rise in complaints around auto renewals. Subscription marketing and so much more. As always, we appreciate you listening and hope you enjoy.
Jonathan:
Certainly, at the federal level, we’re seeing what you might call selective deregulation. Dismantling. Mm-hmm. The CFPB has pulled back, on rule makings leadership changes are affecting priorities, and the administration has really signaled that the CFPB is pulling back so, for consumer financial services companies, there’s a big shift there, but that doesn’t mean that risk is gone.
The risk isn’t gone, the underlying, you know. Consumer protection statutes, whether it be the Federal Trade Commission Act, the Consumer Financial Protection Act, any of the alphabet soup that applies to consumer financial products and any of the, litany of statutes that apply to advertising and marketing on the federal level Plus state, unfair, deceptive and abusive practices laws, they’re all still very much enforced. None of them have been amended or changed at this point. As a result of that, enforcement is becoming less predictable and as more of it shifts to the states or others that will fill the gap plus the FTC and increasingly private litigants. That’s gonna be the new risk profile in terms of where exposure might be.
The legal risk hasn’t disappeared. It just becomes more diffuse, harder to forecast perhaps less cohesive. As a result, organizations really need to anticipate that instead of, a clear-cut threat to the business or any one regulator or issue becoming at the forefront, it could very much be, a potpourri of issues.
So, you know, I think. That companies shouldn’t equate fewer regulations or any of these shifts that are happening on the federal level, with elimination of risk. If anything, it’s the time to strengthen both forecasting and horizon scanning and also really to make sure that companies continue to backstop and reposition compliance as a strategic function.
I don’t think. Legal and compliance should be, viewed as a no or a red light, you know, at their best legal and compliance helps companies get to a very confident position on yes, and how to build forward on products, services, initiatives, marketing campaigns, whatever it might be.
Rhonda:
And I think we have to look at look at compliance as kind of that growth generator. There’s, so many opportunities right now with compliance to really lean into the business and really help identify areas of growth and to really, you know, shore up some of the areas where there’s potential exposure.
So hopefully people do see that compliance is, it still matters along the way.
Ellen:
I agree with, Jonathan very much. The rules, if they’re still there, they’re still there. There might be different enforcement priorities around them, but compliance is gonna be changing in other ways.
So, there is a lot going on, as Jonathan said, that you have to watch a lot of different things, the changes at the agencies, the changes at the state dynamics versus the federal dynamics. Evolution of how, class action lawsuits will go. But the other thing, I would be cautious about in compliance and why you really can’t take the foot off, you know, you got, you really have to continue to be careful in compliance and that is really because of changes to just how even on the litigation side, companies are approaching it. We’re seeing a lot more aggression towards regulators and the policies they have set over the years, which may have benefits for compliance and may make compliance more confusing or bring less clarity to compliance. One of the big themes we see right now is really, a lot of arguments that many of our regulators have overreached. We see that in a lot of what’s going on with the Federal Trade Commission, even the CFPB.
We just had a court decision come out yesterday saying that the fed overreached on setting its interchange rate allowances for debit cards under Durbin. We’ve had one lawsuit after another. We’ve seen former FTC defendants in Cases and former DOJ defendants in cases who might have been previously alleged to have made a marketing or an advertising claim without proper substantiation now going on the offensive and saying, hey those rules that you’re holding us to for substantiation really don’t emanate anywhere from Congress.
So you’re, overreaching. And we see this even when the FTCs click to cancel rule recently got canceled. By the circuit, it was because there was an allegation that the FTC didn’t cross all of its t’s and dot all of its i’s in doing that. So, as we see people making legal efforts to sort of tamp down on regulatory overreach, and this becomes a compliance issue, and maybe some of this is really, some might say it’s really needed and helpful and they’re tired of the overreach, but it may also lend its way to sort of not having clear rules anymore. At least at a time where law enforcement is low on some of these things or, or there’s not. There, there’s a lack of clarity on what to do correctly. So again, just watching it, we always say compliance is multifaceted. It’s not just reading the rule and following it. It’s, understanding. How it becomes an enforcement problem or a litigation problem and working backwards from there. So, I would say paying very close attention to the litigation issues and what’s going on on these fronts is, is a part of what we need to do in compliance.
Rhonda:
And I appreciate that. And you kind of went into some of what I was gonna ask you next was, with regards to some of the, consumer protection, you know, we’ve seen an increase in attention, on things like the auto renewals and the subscription marketing and a rise in consumer complaints that are mostly tied to payment scams. So where are you seeing the most regulatory scrutiny and what steps should financial institutions be taking to reduce their exposure?
Ellen:
It is really, you know, there are certain priorities. Subscriptions is still very much a priority. Fees is a very big priority, and this is the actually carryovers from the last administration.
Rules and sort of interest in things, junk fees, add-on fees, surcharges, has been around now for a while and it’s actually still very much there in this current administration. So those are priorities. We also look very much at sort of where these are targeted. So, Chairman Ferguson at the FTC, has set forth the FTCs sort of law enforcement priorities, and these are very much at the top of the list, as is robocall scams against the elderly, scams against veterans.
Financial related scams is still on the list. So, you know, the FTC is still quite active, so you’ll see all of these priorities come forward. The priorities that, he testified to Congress about in May, chairman Ferguson, you’re seeing these now start to come out in the FTCs most recent law enforcement cases, the FTC seems to actually be doing what it said it would be doing.
So, I don’t know, Jonathan, if you wanna add on to that, we can certainly go into more detail on subscriptions and fees, but. High level thoughts.
Jonathan:
I think Ellen’s absolutely right, these risks haven’t gone away. We see now also in private lawsuits, the support for allegations around junk fees that are alleged.
Those issues while they were. Certainly, given a lot of attention in the last administration are now omnipresent on the state level and also in private lawsuits. And that is any number of products and services, whether it be subscription products generally, or we’re also seeing it too on the consumer finance side as well.
Any number of FinTech products are sold in a very similar manner to what used to be a magazine, or anything else that was done by subscription. So, I think that one of the keys for companies is to continue, to invest in product development, review the consumer flows, the screens, the experience.
At the end of the day, there are any number of guidelines one can put forward and read about, or, and even in some cases, statutes and rules that will govern these practices. But where the rubber hits the road is really on what’s visually before and available to the consumer. And there’s certainly many times when dealing with things on the defense side that we’ll see where slight tweaks, during the product development and the user experience, development process, those changes if they had been made slightly different or gone one direction versus another, could have perhaps mooted an entire issue in an alleged complaint or demand letter or, any other sort of regulatory type scrutiny.
To reduce exposure, companies can focus on simplifying their disclosures, making the cancellation process frictionless. And I think, and this is, you know, that’s gonna be relative, it’s gonna depend on the business and how all this stuff’s set up, but another key is auditing the marketing, and the advertising and the consumer facing, funnels for misleading impressions and, potential or alleged detours.
So even if they’re technically compliant, at least, you know. Setting all that aside, they’re, they’re facially built to avoid even the initial question of, is this, up to snuff? Is it, is it compliant? The trend we’re seeing is it’s not just regulators. It’s also plaintiff’s lawyers. And if they even get a scent of it, it doesn’t take that much effort on their part once they have a plaintiff to fire off and cause a lot of trouble for a company.
Rhonda:
Thanks for listening to this week’s episode of the COMPLY Podcast! As always for the latest content on all things marketing compliance you can head to performline.com/resources. And for the most up-to-date pieces of industry news, events, and content be sure to follow PerformLine on LinkedIn. Thanks again for listening and we’ll see you next time!
