Skip to main content

Social Media

Ultimate Guide to Social Media Compliance for Consumer Finance

PerformLine
January 5, 2023
ultimate-guide-social-media-compliance-consumer-finance

Just like other consumer-facing channels, financial service marketers using social media need to understand the regulations and abide by compliance obligations. Understanding the rules and risks is crucial to building a solid social media compliance program and ensuring that social media can be used as an effective and safe marketing tool.

This article outlines the regulations governing social media, industry-specific regulations, the reputational risks of social media, and how to manage social media marketing and compliance.

Table of Contents

The regulations governing social media compliance

What is Social Media Compliance?

Social media compliance ensures that your company’s marketing content on social media channels follows the rules and regulations set by the government. Marketers using social media must understand these regulations and abide by compliance obligations.

There are several regulations that cover social media compliance, such as:

Truth in Advertising 

The Truth in Advertising law’s purpose is to ensure that consumers receive accurate and non-misleading information via advertisements. Under Truth In Advertising, the Federal Trade Commission (FTC) requires that:

  • Advertisements must be truthful and not deceptive
  • Advertisements with specific claims must be substantiated with evidence
  • Advertisements cannot be unfair or deceptive

Unfair, Deceptive or Abusive Acts or Practices (UDAAP)

The Consumer Financial Protection Bureau (CFPB) is the primary regulator for overseeing UDAAP for consumer finance companies, but others, such as the FTC, the Office of the Comptroller of the Currency (OCC), and State Attorneys General all have the authority to enforce UDAAP provisions. 

Just like any other marketing communication, social media posts must comply with UDAAP provisions.

Consumer Review Fairness Act

The FTC’s Consumer Review Fairness Act protects consumers’ ability to share their honest opinions about a business’s products, services, or conduct in any forum— including social media. Under this act, companies cannot include contract provisions that:

  • Prohibit negative reviews
  • Impose a penalty or fee on a person who posts a review
  • Require individuals to transfer intellectual property rights in reviews

Rule 2210

FINRA’s rule 2210 outlines the requirements for communicating with the public, which applies to social media as well. In simplest terms, FINRA requires that member organizations:

  • Keep a record of communications from at least the past 3 years
  • Supervision of business-related content associated persons are communicating on social media (including recommendations)
  • Reviewal and recordkeeping of third-party social media posts
  • Organizations do not link out to a third-party site with false or misleading information
  • Set procedures to supervise interactive electronic communications that recommend specific products
  • Fair and balanced communications

Industry-specific regulations for social media compliance

Financial institutions must ensure that social media accounts and posts—whether it’s from their own brand or a third party—do not violate any of the applicable regulations specific to their financial product or service. 

Industry and product-specific regulations also apply across social media channels, such as (but not limited to):

  • Truth in Savings Act: Social posts must include and clearly state certain information, such as the minimum balance required to obtain the advertised APY or bonus. These do not have to be directly in the post (especially since platforms like Twitter limit character count), but you should at least provide a link to a place that clearly discloses all necessary information.
  • Fair Lending Laws: Institutions should ensure that their social posts do not violate fair lending laws, such as the Equal Credit Opportunity Act and the Fair Housing Act. Companies should not, through their social media marketing efforts, discourage or limit people from applying for a credit card, mortgage, or housing based on race, religion, national origin, sex, marital status, age, handicap, or because they receive public assistance.
  • Truth in Lending Act: Any time a creditor promotes or advertises credit products through their social channels, they must ensure that they are presenting in a clear and conspicuous manner.  It is required that certain disclosures such as loan terms, annual percentage rates, and costs must be included to promote the informed use of consumer credit options.
  • Real Estate Settlement Procedures Act (RESPA): RESPA requires all lenders and mortgage brokers to provide clear and complete information concerning real estate transactions and settlement services while meeting consumer protection laws on social media. The act also prohibits promoting fee-splitting, kickback, or exchanging something of value to acquire referrals or business through social media. 
  • Fair Debt Collection Practices Act (FDCPA): FDCPA restricts debt collectors from using social media to contact consumers (and their friends or family) and publicly disclosing the owed debt. This act prohibits communication over social media, whether publicly or privately, to state false or misleading information, declare the existence of a debt, and harass or embarrass consumers about any debts they may have incurred.  
  • Deposit Insurance or Share Insurance: When a depository institution or credit union promotes or advertises any FDIC or NCUA-insured products through social media, they must include a statement of membership of the FDIC or NCUA, respectively. If a depository institution promotes non-deposit investment products to their consumers through social media, they should disclose that these products are not insured by the FDIC or NCUA and are not guaranteed insurance. 
  • Bank Secrecy Act/Anti-Money Laundering Programs (BSA/AML): An institution’s BSA/AML program must provide for the following minimum components: a system of internal controls to ensure ongoing compliance; independent testing of BSA/AML compliance, a designated BSA compliance officer responsible for managing compliance, and training for appropriate personnel. These controls should apply to all customers, products, and services, including customers engaging in electronic banking (e-banking) through the use of social media, and e-banking products and services offered in the context of social media.
  • Gramm-Leach-Bliley Act Privacy Rules and Data Security Guidelines: The Gramm-Leach-Bliley Act requires financial institutions to maintain the privacy and security of consumer information.  When such institutions use social media to take applications or upgrade their consumer’s online account experience, they are required to provide disclosures about their privacy policies clearly and are apt to face reputation risk when discovered to be treating consumer information carelessly or lacking transparency in their policies.
  • CAN-SPAM Act and Telephone Consumer Protection Act: The CAN-SPAM Act and TCPA establish requirements for sending unsolicited commercial messages or spam, and unsolicited communications by telephone or SMS messaging. Financial institutions should be familiar with the provisions of the CAN-SPAM Act and TCPA to evaluate whether social media activities trigger the application of either or both laws.

Fair Credit Reporting Act (FCRA): The FCRA requires certain regulations to be applied, especially when using social media, to promote the accuracy, fairness, and privacy of consumer information. This act includes restrictions and requirements necessary for making negligent solicitations, responding to disputes, and collecting medical information in connection with loan eligibility.

Reputational risks of social media and how to mitigate them

Along with regulatory risks, there are several areas of reputational risk for financial institutions using social media. 

According to the Federal Financial Institutions Examination Council (FFIEC), “a financial institution engaged in social media activities is expected to be sensitive to, and properly manage, the reputation risks that arise from those activities.”

Here are the reputational risks that consumer finance organizations face when using social media marketing.

Fraud and brand identity

As social media is an ever-changing marketing channel, protecting your brand identity can be challenging. You may face risks through comments made by social media users, spoofs of brand accounts, or users fraudulently posing as a company.  

Fortunately, that’s why social media monitoring tools exist. Using a social media monitoring platform, such as PerformLine, will help monitor for brand mentions, identify heightened risk, and give you the opportunity to respond appropriately.  

Third parties and partners

Financial Institutions working with third parties should regularly monitor the information being placed on their social media sites.  

Your organization is liable for what third parties say on your behalf, and you will be the one to hear from regulators and consumers if something goes awry. 

Organizations should ensure they are evaluating the third party or partner’s reputation in the marketplace, paying attention to their policies, the process and frequency by which the third party’s policies may change, and what—if any—control the institution has over the third party’s actions.  

Simply put, it’s vital that you do your research before choosing a partner and that you keep up with monitoring the information they post on behalf of your organization.

Data privacy and protection

Organizations need to be cautious and monitor the possibility of a consumer posting confidential or sensitive information on the institution’s social media pages or sites. 

A customer unknowingly posting private information causes privacy headaches for organizations, even when they are complying with applicable privacy laws in their social media activities.  

Monitoring for these instances and having a set procedure or plan in place to address them if, or when, they occur will ensure the institution is properly protecting itself and its reputation.

Consumer complaints

Organizations could run the risk of damaging their reputation by not catching or responding to complaints made by consumers via social media.  

Consumers can make critical or inaccurate statements or publicly expose specific issues about their accounts over social media—scenarios that financial institutions should be aware of and be ready to remediate.  

Institutions need to have processes in place to monitor for and respond to complaints and concerns promptly.

How to manage social media compliance and marketing

According to FFIEC, financial institutions “should have a risk management program that allows it to identify, measure, monitor, and control the risks related to social media.” This document takes into consideration all agencies that regulate social media, including the FTC, CFPB, FDIC, and others. 

Here’s how to best manage your social media compliance program to effectively mitigate your risk.

Governance structure

Financial institutions should have a clear structure in place that directs how social media should be used to contribute to the organization’s overall goals. These goals can include but are not limited to increasing brand awareness, promoting products, or researching new customer bases. 

This governance should establish clear roles and responsibilities for those handling the institution’s social media accounts and implement controls and ongoing risk assessments related to all social media activities.  

Policies and procedures

Implementing policies to provide a framework for using and monitoring social media channels is a great way for institutions to ensure that all employees, partners, and third parties are on the same page and understand the compliance standards that need to be met. 

These policies and procedures should address all applicable consumer protection laws and regulations and are responsible for guiding employees on how to move forward. They should also include the institution’s approach to addressing risks for both posting and replying to users.

Employee training and education

Providing an employee training program to guide employees on how they can use social media while staying compliant will greatly help mitigate and control the risks related to social media.

While most employees most likely already understand the basic concepts of social interaction across the various social media platforms, not all employees may understand the diverse components that go into compliance and risk management within the financial industry.  

Such a program should incorporate details of the institution’s policies and procedures relevant to social media use, outline what may be okay to share on social media platforms, and define behaviors and posts that are not permissible by employees on social media. 

By educating employees on how social media can affect their institutions, both positively and negatively, you can ensure that employees understand how the institution is presented on social media, how their personal accounts may affect, and risk the reputation of the institution, and how to ensure proper compliance.

Oversight process for internal and external entities

Social media is a great resource to promote your financial institution and the products or services offered. However, it’s important to understand the regulations and restrictions surrounding social media use within the financial services industry so as not to incur harsh penalties or fees. 

Implementing an oversight and monitoring process for all social media accounts—including those of employees, partners, or other third parties—will help you keep track of brand mentions and ensure compliance. 

You can do this manually, by having a person or team of auditors do spot checks, or by use of an automated platform for your social media monitoring, such as PerformLine, to identify potential regulatory compliance violations or brand marketing abuses for remediation one that can check an enormous number of pages every day, against the rules you require. 

This can help you uncover potential or occurring risks and discover mentions of your brand and ensure partners are representing your brand appropriately. When you’re investing a large amount of time, energy, and money into your financial institution’s social presence, then it’s in your best interest to ensure you’re doing it right.  

Audits

Institutions should be performing audits of all social media channels to assess performance and possible risks. By taking the time to compile data across all of your social platforms, you will be able to get a much bigger picture of the social content your institution has been pushing out. 

These audits can not only give insight into what posts are performing the best or if you’ve met any of the social media goals that were set, but also allow you to ensure that you have been meeting your institution’s compliance standards. 

Understanding how your institution has been meeting compliance with internal policies and any applicable laws or regulations can help you ensure you’re incorporating any new guidelines that may need to be added, improving processes and procedures, and addressing any issues that have come up. 

Reporting

Finally, financial institutions should be evaluating the effectiveness of their social media channels and determine whether the program is achieving its goals and objectives. 

Do the benefits outweigh the risks? Are you connecting and engaging with your target audience? What specific KPIs are you seeing for both marketing and compliance? 

These questions will help to visualize what your social media is accomplishing for your company, understand how it can be modified to see increased results moving forward, and hone in on problem areas.

Get the Ultimate Social Media Compliance Checklist

The best way to get out ahead of regulatory risk is to build a robust social media compliance program.

Not sure where to start? We got you covered.

Use this checklist to help shape your organization’s social media compliance program—from documentation, training, and education to compliance monitoring, remediation, and technology—to ensure regulatory and marketing compliance across social media. 

Make social media compliance easy with PerformLine

Social media compliance doesn’t have to be difficult.

PerformLine’s omni-channel compliance monitoring technology automates…

  • Marketing compliance review and approval process of social media content
  • Ongoing monitoring of internal and external social accounts across multiple platforms including Facebook, Instagram, YouTube, LinkedIn, and Twitter
  • Discovery of unknown or unapproved social media posts

…to make social media compliance oversight streamlined, efficient, and painless. 


Learn how you can reap the benefits of social media marketing while mitigating regulatory compliance risks with PerformLine.

Frequently Asked Questions

What are some ways that financial institutions have successfully implemented social media compliance strategies, and what were the typical outcomes or benefits observed?

Financial institutions often implement social media compliance strategies through employee training, clear policy dissemination, and utilizing social media compliance software. Success stories usually highlight enhanced adherence to regulations, less legal risk, and improved brand integrity.

How often are the social media compliance regulations updated, and how can you best stay informed about these changes?

Social media compliance regulations are dynamic, updating with changes in technology, consumer behavior, and legal standards. Institutions usually subscribe to regulatory updates from official bodies and use compliance management software that includes updates on new regulations to stay informed.

What are the key performance indicators (KPIs) or metrics financial institutions may use to determine the effectiveness of an organization’s social media compliance programs?

A number of criteria can be used for testing the effectiveness of the social media compliance program: compliance audit rate, detected violations, and response time to potential violations, along with percentages of employee compliance training completed. These indicators help institutions gauge the robustness of their compliance efforts and identify areas for improvement.

Stay Updated

Join thousands of other industry professionals

Subscribe to receive the latest regulatory news and updates with a focus on marketing compliance via content offers, newsletters, blog posts, and more
This field is for validation purposes and should be left unchanged.

Connect with PerformLine and see what we can do for you.