Podcast

Ethan

Did you hear that Emeris Bank based in Florida had to pay the us government $9000000 to settle claims of illegal redlining. What is it and how does this impact your financial institution's use of social media and digital marketing. We're going to talk about all that in more are you ready? let's. Go. Welcome to the social media law cast hi I'm your host social media attorney Ethan Wall and we're going to dive right in today because Emeris Bank just had to pay the Us government $9000000 to settle claims of a legal redlining. What did the Us government charge Emeris Bank with giving out and marketing loans only to certain types of demographics in the Jacksonville area. In other words, the us government claimed that Emeris Bank avoided giving mortgages to Latinos African Americans and other minorities and instead promoted and gave their mortgage products to. Only people in high income areas or who met certain Caucasian type profiles now Emeris Bank has denied those claims and settled this case without admitting liability. But let's talk about what the laws are what Ameris Bank allegedly did and how it was wrong and how it could.

Ethan

Impact your financial institution's use of social media. You see the federal government has fair lending laws to make sure that loan products and mortgages specifically are marketed without discriminating against people's protected classes such as race national origin or age. And so laws such as the fair housing act for mortgages or the equal credit opportunity act for loans prohibit financial institutions from discriminating in providing these loan products or marketing these loan products here. The federal government believed that Emeris Bank was illegally redlining meeting cutting out a portion of the Jacksonville area that included latinos and minorities and instead were giving mortgages only to other parts of the Jacksonville Community this would have been a legal redlining if the marketing and promotion of these mortgage products specifically excluded these demographics while Amera Bank settled the case and we don't have concrete evidence of exactly what we did. There's a reason that there was a $9000000 settlement in the first place because this situation didn't look. Right? to the federal government and they are enforcing these laws more often. So what does this mean for your financial institution specifically when it comes to social media and digital marketing. It is because through the power of online marketing.

Ethan

We have the ability to send specific types of content or ads only to specific people and if we inadvertently exclude people based upon their protected classes such as race age national origin or otherwise we could be found to be. Legally redlining as well. So let me give you a classic example of how this could inadvertently arise at your financial institution and then we'll talk about what you can do to avoid it. Let's say that you wanted to have a new checking account that was free checking for recent college graduates. And so you wanted to target this content to people whose ages were 21 to 27 who lived within 10 miles of your local university and your reason for that would be solid meaning that people like me Ethan Wall social media lawyer who's forty two years old is likely not going to be a recent college graduate and so targeting this to my demographic or to everyone in your geographic area may not produce the best results because recent college grads likely do fit into that age and geographic range. However, this practice. That makes sense from a marketing perspective would violate the illegal redlining provisions of the law if this was a loan product or this was a mortgage because age is a protected class. So if we just switch up this hypothetical.

Ethan

And instead say that you wanted to have a new mortgage loan for recent college grads and you wanted to limit it to people 21 to 27 years old that would violate the fair housing act. And the equal credit opportunity act and would likely be considered illegal redlining because you're carving out part of a demographic based upon a protected class which is age so you can use these targeted marketing features to base things off of geography. Or base things off of any other non-protected class such as let's say an interest in a local university or an alumni from the local university. But if you're using these targeted marketing features in a way that improperly red lines out. Protected classes such as race or national origin or age you might find yourself in a similar situation to Emeris Bank by having a charge from the government of illegal redlining and having to potentially settle this for millions and millions of dollars so how can your financial institution. Take advantage of these really powerful targeted advertising features that Facebook and Google allow but still comply with the equal credit opportunity act the fair housing act and other laws that prohibit illegal redlining.

Ethan

And the answer is by having something called a social media risk management program and specifically digital advertising guidelines or targeted advertising guidelines. Let me explain what both of these things mean. The federal government requires all financial institutions that use social media to have a social media risk management program in a nutshell it consists of guidelines policies and procedures that help to mitigate the risk. And comply with the law when using social media. So whether you're a big national financial institution or a local Jacksonville Florida base financial institution if you use social media or digital marketing. You have to have a social media risk management program that's going to include policies guidelines and procedures to guard against risk. 1 of the types of documents that you want to have as part of your social media risk management program are what we at the social media law firm call targeted advertising guidelines or digital advertising guidelines in a nutshell these guidelines help to direct your marketing department. And your compliance department about how you can use Target advertising features in a way that helps to accomplish your financial institution's goals without accidentally violating the equal protection laws that prohibit illegal redlining.

Ethan

So the guidelines might give your marketing department. Let's say broad flexibility of how they can use Target advertising or digital advertising to promote low risk content such as the opening of a new branch or maybe a sweep stakes something that has nothing to do with products or services. But. If you're going to be using these powerful features to promote loans or mortgages which are a very high-risk area. There might be much more controls over how the targeted advertising features can be used so just running them through your compliance department and making sure that none of these targeting features. On their face or as applied discriminate against protected classes and so this is how your financial institution can use social media and targeted advertising or wonderful Google. Digital advertising tools without finding yourself in a situation like Ameris Bank did where they were charged with the legal redlining and had to pay $9000000 so I hope that you can avoid this $9000000 mistake by having these things in place now if you're looking for more information about. What your financial institution may need please feel free to visit us at the social medialawfim.com if you've got specific questions feel free to find us on social media by searching for the social media law firm or if you want more legal tips news and resources about the effect of social media on the law for banks financial institutions.

Ethan

Small businesses or creators. You could just subscribe to the social media law cast and get a new episode in your phone every single week I hope you found this helpful and that you enjoyed this and that you learn how not to make a $9000000 mistake have a great day.