Last week, we attended Compliance University and had the privilege of helping lead a session on marketing compliance. Our VP of Legal Affairs and Compliance, Cindy-Jo de la Rosa Cometa, shared some helpful information about the rules and regulations governing our industry.

If you missed the presentation, here is some of the information that we shared.

What is Marketing Compliance?

Laws and regulations govern the way we can market our products and services. Marketing compliance is the art of following that legislation. It’s up to your company’s compliance team to ensure that your marketing and advertising content, as well as all your other interactions with consumers, follow the rules dictated by the government. It’s also important to adhere to your brand’s internal requirements.

These laws and regulations touch on every aspect of the marketing process, including:

1. what organizations may say about their products and services and how they say it;
2. what organizations may say about competitors and their products;
3. whether and how often organizations can market to consumers by and through telephone, e-mail, and the Internet;
4. what information organizations can collect from consumers and what they may do with that information.

Why is it Important?

Marketing compliance exists to protect consumers from being misled and deceived. Your content and creatives offer the first impression that consumers have of your brand. Getting off on the wrong foot with the consumer can ruin your reputation. More than that, being embroiled in a compliance violation penalty can cause your company serious and long-term harm, sending the public the message that your business is deceitful, sloppy with marketing, and not trustworthy with consumer information.

Failing to comply with laws that prohibit certain types of language or deceptive acts can financially hurt your company. A state or federal agency can investigate you, file a lawsuit against you, and ultimately fine you for these infractions. The cost of a regulator audit can be extremely expensive, and these expenses can multiply if your company faces additional lost revenue due to consumer distrust.

Basic Advertising Principles

Federal regulations – and in particular UDAP, UDAAP, and Dodd-Frank – make it unlawful to engage in any unfair, deceptive, or abusive act or practice.^[1]

• Unfair – An act or practice is unfair if the CFPB has a reasonable basis to conclude that it causes or is likely to cause substantial injury to consumers when the injury is not reasonably avoidable by consumers and is not outweighed by countervailing benefits to consumers or competition.
• Deceptive – The CFPB states in its Examination Manual that a representation, omission, act, or practice is deceptive if it is material, likely to mislead a consumer, and if the consumer’s interpretation is reasonable.
• Abusive – An act or practice is abusive if it materially interferes with the consumer’s ability to understand a term or condition of a consumer financial product or service and takes unreasonable advantage of the consumer’s lack of understanding of the material risks, costs, or conditions of the product or service; the consumers inability to protect his or her interests in selecting or using the product or service; or the consumer’s reasonable reliance on a covered person to act in his or her interests.

You should keep these definitions in mind when reviewing your content and your affiliates’ content. Taking a conservative approach may help you avoid penalties.

Under Dodd-Frank, the BCFP has enforcement power over UDAAP. They have used this power to open investigations, initiate proceedings, and enter consent orders requiring companies to pay hundreds of millions of dollars in restitution and penalties.

As you work with your affiliates, explain to them what a potential UDAAP violation looks like and what it would mean for your company and theirs. When onboarding a new affiliate, you need to properly vet their content and determine how receptive they will be to you asking for changes to their website content.

You need to have clear and conspicuous disclaimers and disclosures. Never hide important disclaimers in:

• fine print,
• legalese,
• a hyperlinked document,
• or an obscure location on the webpage.

You should place disclaimers near the claims being made, using the same font, size, and color as the related content. Use language that the consumer understands.

It is good to have a checkbox at the end of a loan inquiry form that a consumer must physically click before proceeding. The checkbox text should say something like, “By clicking this box, I agree to the Privacy Policy and Terms and Conditions, and give my express written consent to …”

Your websites will need to include many disclosures. A few important ones:

• Let the consumer know if you are not a lender.
• Never guarantee that a consumer will be connected with a lender.
• If you work with tribal lenders, disclose that a consumer may be connected with a tribal lender.
• If you work with storefronts, disclose that the process is not 100 percent online and the consumer may need to visit a physical storefront nearby.

All marketers should comply with OLA’s Best Practices, which includes a must-read section on advertising and marketing. A good bright-line rule contained in the pages of OLA’s Best Practices is its list of prohibited phrases and terms. These will help you avoid misleading the consumer.

Train your marketing team on how to create compliant content. They are your first line of defense, but you will still need to review all content and creatives before they go out. Your compliance team must review everything before it reaches the consumer.

One example: if you work with a push notification service that sends out messages on your behalf, you should read each line of text and review each image before it goes live.

Quick Tips to Avoid Marketing Compliance Violations

Think like a consumer. Since the goal of compliance regulations is to protect consumers, if you’re unsure about your marketing content, it can help to put yourself in the consumers’ shoes.

Ask yourself these questions:

• Is the message clear?
• Will the public understand it?
• Does anything look deceptive?

If something feels fishy, it probably is.

To ensure that you are practicing due diligence during vendor onboarding, you must require a copy of all creatives and review the content provided. Be sure to keep documentation of what you have monitored.

Not everyone in your company needs to be experts in the nuances of compliance. However, compliance does need to be a priority. Every employee should know that following marketing laws and regulations is an integral part of your company’s core values.

 

[1] https://files.consumerfinance.gov/f/201307_cfpb_bulletin_unfair-deceptive-abusive-practices.pdf