The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule laying out when digital marketing providers for financial firms must comply which federal consumer financial protection laws.
According to the CFPB’s new interpretive rule, digital marketing providers that are involved in the identification or selection of prospective customers or the selection or placement of content to affect consumer behavior are typically service providers for purposes of the law. Because of this interpretation, the CFPB is declaring in this rule that digital marketers acting as service providers can be held liable by the CFPB or other law enforcers for committing unfair, deceptive, or abusive acts or practices (UDAAP) as well as other consumer financial protection violations.
The CFPB’s primary concern with this new rule is the use of sophisticated behavioral targeting techniques, especially when machine learning, advanced algorithms and large amounts of personal data are involved.
“When Big Tech firms use sophisticated behavioral targeting techniques to market financial products, they must adhere to federal consumer financial protection laws,” CFPB Director Rohit Chopra said. “Federal and state law enforcers can and should hold these firms accountable if they break the law.”
This new interpretive rule is the latest in federal efforts to clarify rules relating to marketing practices. Recent actions have seen the CFPB and Department of Justice pursuing a new, broader definition of ‘redlining’; the Federal Trade Commission (FTC) updating its digital advertising and social media influencer marketing guides; and the FTC and CFPB taking enforcement actions against companies that prevent consumers from seeing negative online reviews.
Federal regulators are concerned with the way marketing has changed in a more digital and online age. Because nearly all consumers have an online presence to some degree, and that online presence generates data, the regulators have begun paying closer attention to the way marketers collect and use consumer data.
The new interpretive rule from the CFPB distinguishes between marketers which solely provide “time and space” for an advertisement with those that are active participants in the marketing and data collection or utilization.
To read more the latest rules and guides, download the Marketing Compliance for Lenders special report from Dodd Frank Update.