Social media compliance for financial institutions can be confusing. For starters, nearly all banks and credit unions existed prior to the rise of social media. This means that the laws governing financial institutions existed prior to most banks and credit unions use of social media sites like Facebook and Instagram. This often results in Marketing, Compliance, and Legal Departments at banks and credit unions asking the question, “which regulations cover the use of social media by financial institutions?” Allow us to shed light on the situation.
A handful of years ago, the Federal Financial Institution Examination Council released its Social Media Guidance Memorandum. In the industry, this memorandum is often called the FFIEC Social Media Guidance. The purpose of this memorandum was to set forth which laws and regulations apply to banks and credit unions’ use of social media. It also clarified what the federal government expects financial institutions to have in place to manage risks arising from their social media use. Breaking these regulations down in plain-English is often a good place to start.
Let’s first give you rundown-and-dirty of the regulation that cover the use of social media by financial institutions:
The Truth in Savings Act requires financial institutions to make certain legal disclosures to enable consumers to make informed decisions about deposit accounts. These generally include fees, annual percentage yield (APY), interest rates, and other terms.
The Equal Credit Opportunity Act prohibits banks and credit unions from advertising or marketing to applicants or prospective applicants in a discriminatory manner. In other words, financial institutions cannot promote credit or housing products in a way that would discourage or inhibit disadvantaged consumers or people of protected classes (such as race, gender, and the like).
The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, or handicap in the sale and marking of housing, mortgage lending, and real estate products. Similar to the Equal Credit Opportunity Act, financial institutions cannot utilize discriminatory marketing – and must include certain disclosures when promoting real estate products online (such as the Equal Housing Lender logo).
Any social media content advertising credit or loans must provide accurate information about terms and fees. This means that financial institutions must include certain financial disclosures in a clear and conspicuous manner. Usually, most banks and credit unions comply with this regulation by include a clearly written hyperlink that directs consumers to the complete terms and conditions that apply to the lending product.
There are several other regulations that cover the use of social media by financial institutions, including the Community Reinvestment Act, Bank Secrecy Act, and the Real Estate Settlement Procedures Act to name a few. Moreover, there are advertising regulations that apply equally to banks and credit unions for online marketing such as the CAN-SPAM Act, the Federal Trade Commission’s Truth in Advertising Laws, and others.
As you can see, there are many regulations that cover the use of social media by financial institutions. Failure to follow these laws can expose your financial institution to serious compliance and legal risks. Pursuant to the FFIEC Social Media Guidance, your financial institutions needs to maintain as Social Media Risk Management Program – and we can help.
The Social Media Law Firm has been serving banks and credit unions for over ten years. Social media banking lawyer Ethan Wall and his team have dealt with these issues time-and-time again, and this insight is exactly what prepared us to be your guide. We can help you prepare the necessary policies, guidelines, and training to ensure you comply with these financial regulations on social media. So, if you are looking for a social media attorney for banks, feel free to reach out to us for help.
We invite you to schedule a complimentary telephone consultation to learn more about your business. We’re ready to field your questions and provide you with a plan to improve your legal protection.
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