Does Your Use Of Social Media Comply With Federal Law?

December 12, 2013 at 8:28 am Leave a comment

Well, you can add guidance on ensuring that your social media complies with consumer lending laws and regulations to the task list for your compliance officer or, as I know is more commonly the case, the person who handles the credit union compliance while wearing many other hats.

Yesterday afternoon, the FFIEC, the loya jirga of financial regulators including the NCUA, released a joint guidance on consumer compliance risk management issues related to the use of social media by financial institutions. The guidance was prompted by industry participants who “expressed a need for guidance in this area.” Personally, I would like to know who these well meaning knuckleheads are, but more on that in a moment. In a nutshell, the guidance reminds us that interactive technology like Twitter, Facebook, and even YouTube are not exempt from federal banking laws and regulations.

First, the good news. The guidance alleges not to impose any new requirements on financial institutions. It is intended to provide considerations for them to keep in mind when utilizing social media. In this vein, the guidance is largely comprised of thumbnail descriptions of various legal requirements like RESPA and the Truth in Lending Act and examples of how they could impact a financial institution’s social media platform.

Now for the bad news. It is expected that a financial institution has “a risk management program that allows it to identify, measure, monitor and control the risk related to social media.” As is almost always the case, this requirement is qualified with the mantra that such a program should be commensurate “with the breadth of the financial institution’s involvement in social media.”

Simply put, the more you use Facebook, YouTube, and yes, even blogs, to engage with and attract new members, the more time and effort you should put in to ensuring that you don’t run afoul of federal laws and regulations. In addition, the guidance points out that even without those nettlesome federal laws, there are clear operational and reputational risk to consider in developing your social media platform.

So, what bothers me about this guidance? The fact that we need it at all. In the zest of compliance people to be compliant, we sometimes ask questions that have no answers or that are best left answered on a case-by-case basis. The result is nebulous guidance that provide little practical benefit to compliance programs while diminishing the flexibility you should seek in complying with federal laws of which we should all be well aware.

Entry filed under: Compliance, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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