Social media is everywhere, and everyone is using it; it is a part of everyday life. People use it to keep up with trends, find out news and celebrity gossip, keep up with family and friends, and to show others what they have been doing in their lives.
Social media is defined by the Federal Financial Institutions Examination Council (FFIEC) as a form of interactive online communication in which users can generate and share content through text, images, audio, and video via multiple platforms including, but not limited to Facebook, GooglePlus, MySpace, Twitter; forums, blogs, customer review sites, bulletin boards; photo and video sites such as Flicker, InstaGram, and YouTube; professional networking sites; virtual worlds; and social games.
According to Pew Research Center, 74% of adults use social media of some form. Documents, pictures, personal and business information, videos, and music are common forms shared on the various social media platforms. As of June 2015, Facebook has 968 million daily active users, 844 million mobile daily active users on average, 1.49 billion monthly active users, and 1.31 billion mobile monthly active users.
So, how does this impact you? Well, financial institutions can, and many do, use social media in a variety of ways. For example, you can advertise loan promotions, announce new product offerings, originate new accounts, and request feedback from customers—all through your institution’s social media platforms. You can also use social media to manage vendor relationships, post company updates, announce acquisitions, tout employee promotions, follow industry blogs, or keep tabs on trends in the industry.
Because social media can be used as a way to interact with your customers, it is subject to some of the same rules and regulations you're required to follow in other channels. The CFPB and the FFIEC have released a guide on social media and its use by financial service providers. This 19-page document outlines the process that was used to determine the guidelines, as well as what those guidelines are. Today, I will give a breakdown of how some of these rules apply to social media to help you stay compliant and mitigate risk:
Truth in Savings Act/Regulation DD and Part 707
If you decide to promote your institution’s deposit accounts via social media, make sure that the advertisement is not misleading and that disclosures are either included in the post, or can easily be accessed via a direct link.
Fair Lending Laws
If you promote your lending program on social media, ensure that you do not violate the Equal Credit Opportunity Act/Regulation B or Fair Housing Act:
Avoid discouraging applicants or prospective applicants from pursuing a loan application.
Observe Regulation B timeframes for notifying applicants of application outcomes and/or requesting additional information to complete applications.
If credit is denied, provide a notice with specific reasons for the decision.
Do not request, collect, or use an applicant’s personal information such as race, color, religion, national origin, or sex.
Display the Equal Housing Opportunity logo on all social channels if you offer mortgage lending.
Truth in Lending Act/Regulation Z
If you use social media to promote credit products, you must include proper disclosure of the annual percentage rate and other loan features.
Fair Debt Collection Practices Act (FDCPA)
If you use social media as a means to inappropriately contact debtors or their families and friends, you could violate the FDCPA. Likewise, using social media in any way that discloses that a borrower owes a debt, or to harass or embarrass them, could violate the FDCPA.
Consult the full FFIEC guide for a more detailed list of each rule. Ultimately, your best bet is to present your financial institution on social media in the same manner as you would with any other form of advertising and promotion, adhering to the same laws and regulations.
As a final thought, stay aware of the ever-changing landscape and any new regulations. Consult with your risk assessment team and determine how your financial institution will utilize social media to interact with your customers and prospects.