Social media platforms can be said to be in every corner of the globe and almost all persons are in it in one way or the other. It is used to know how the world is like, to be updated on news and rumors about the favorite celebrities, maintain connection to friends and families, and to share what has been going on in people’s lives.
According to the definition given by the Federal Financial Institutions Examination Council (FFIEC), Social media refers to media that is interactive that can utilize text, graphics, audio, and video where people can create and share their content through social networks including Facebook, Google Plus, Myspace, and Twitter; Users’ shared content through forums, blogs, customer reviews, bulletin boards; picture and video sharing through Flicker, InstaGram, and YouTube
Vivipins has found out that of the adult population, 74% use social media of any given kind. Photos, text, identification data, films, music, documents, and other attachments which are typical for most of the existing social networks. Currently, statistics shows that Facebook has 968 million daily active users, 844 mobile daily active users on average and 1. 2 It has 49 billion monthly active users and 1. Currently, mobile reaches 31 billion monthly active users.
Well, in that case how does it affect you? Indeed, it is important to mention that financial institutions still can, and do, employ social media in a number of those ways successfully. For instance, you can use your institution’s social media account to post an advertisement on a lending promotion, introduce new products, open new accounts, or seek for customer feedbacks. It can also be used in handling relations with the vendors, posting company news, announcing an acquisition, celebrating promotions of employees, reading the industry blogs or even monitoring trends that arise in the industry.
This is because social media is a form of social communication providing an interface to communicate with your customers and therefore cannot be free from some of the rules and regulation that defines admissions in the numerous modes of communication. Both the CFPB and the FFIEC have put out a guide specifically addressing the use of social media by the providers of financial services. This document consists of 19 pages and describes the process used to establish the guidelines. Today, I will provide a breakdown of how some of these rules apply to social media to help you stay compliant and mitigate risk.
TSAct/Reg DD and Part 707
In the event that you choose to market your institution’s deposit accounts on the social media platforms, be sure not to mislead the audience, ensure necessary disclosures are made in the post, or users can find them by clicking on a link within the post.
Fair Lending Laws
When promoting your lending program on social media, ensure that you do not violate the Equal Credit Opportunity Act/Regulation B or Fair Housing Act. Do not discourage an applicant or prospective applicant from submitting a loan application.
- Comply with Regulation B with reference to time taken to inform applicants of status of their applications, and/or requesting further information in order to complete applications.
- In case of refusal to issue credits, you also need to give the client a notice with references to the circumstances that imply refusal.
- Never ask, acquire or utilise applicant’s private details like race, colour, religious beliefs, origin, or sex.
Truth in Leding Act/Regulation Z
When advertising credit products on social media platforms, certain requirements need to be met. These include disclosing the annual percentage rate and other characteristics of the loan.
The debt collection process is regulated by the Fair Debt Collection Practices Act (FDCPA).
If you attempt to communicate with debtors or their loved ones through social sites it deems you violate FDCPA. Similarly, if a communication is made on social media in a way that reveals that a borrower is in the debt to them, or the use of social media that amounts to harassment or embarrassment of a borrower – this is prohibited by FDCPA.
Please refer to the full FFIEC guide to review the details of each of the rules mentioned over here. In the end, it is possible to promote the financial institution on the social networks in the same way as promoting on any other legal ways and means that are acceptable.
Last but not the least, one should always be in touch with the changing scenario and any new rules and regulation. Discuss with your risk assessment team and decide how your financial institution is going to engage its customers and the prospective clients through social media.