managing your affiliates and partners in the financial ... partners in the financial industry ....

Daniel Morton Product Marketing Manager

MarkMonitor

Managing Your Affiliates and Partners in the Financial Industry

Agenda

Part 1: A Web of Financial Regulations

Overview

Regulations Worthy of Focus

Examples of Corrective Action

Part 2: Design a Robust Program to Find & Correct Violators

Visibility

Education

Enforcement

The Web of

Financial Regulations

A confusing web…

Graphic Credit: US Government Accountability Office (GAO)

Regulations…on top of regulations.

Pages in the Code of Federal Regulations (2015)

Pages in the Code of Federal Regulations (1975)

Increase in BUDGET allocated to US Regulatory Agencies from 1960 to 2017 (adjusted for inflation)

178,277

71,224

1,933%

Source: Regulatory Studies Center, George Washington University

Associated Persons Rule

We do not differentiate between employees and other associated persons for securities law purposes. Broker-dealers must supervise the securities activities of their personnel regardless of whether they are considered ‘employees’ or ‘independent contractors’ as defined under state law.

https://www.sec.gov/divisions/marketreg/bdguide.htm

“

”

https://www.sec.gov/divisions/marketreg/bdguide.htm

Regulations for Focus

1. Privacy Statements 2. Disclosures 3. Endorsements 4. Advertising

• Exclusions • Deceptive Practices

5. Social Media Guidance 6. CAN-SPAM Regulation 7. Copyright/Trademarks

Misuse

Consumer Communication

Marketing Practices

Actions of your Brokers/Agents/Franchisees

Privacy Statements

The Financial Privacy Requirements of the

Gramm-Leach-Bliley Act

• “Clear, Conspicuous and Accurate” • “Reasonably Understandable” • “…designed to call attention to the

significance of the information…”

Must be:

• Hyperlinked from main page and transaction page

Can be:

Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright

Disclosures

CLEAR and CONSPICUOUS

Source: “.com Disclosures: How to Make Effective Disclosures in Digital Advertising” FTC, March 2013

• Close to triggered claim • Take account of devices

used for viewing ad • Use hyperlinks – must be

clearly labeled • Repeat disclosures if

necessary

When are they needed?

• Be truthful and not misleading • Have evidence to back up claims • Be fair

Advertising must…

How should they be displayed?


https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-staff-revises-online-advertising-disclosure-guidelines/130312dotcomdisclosures.pdf

Disclosures – Industry Specific Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright

• Full Legal Name of Insurance Company

• Location of Principal Office • Listing of states where

insurer is licensed • Some states want License

number

Insurance Industry: Mortgage/RE Industry:

• Identification as Broker or Salesperson

• Licensing authority name. • NMLS identification number

Endorsements & Testimonials

FTC Section 5 (15 U.S.C. 45)

PART 255—GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS IN

ADVERTISING


• Reflect honest opinions, findings or experience of the user

• Not represent something that would be deceptive if made by the advertiser

• Disclosure of any compensation provided

Must:

• Include Additional Burdens • Restrictions for Life Insurance

So easy to sign up! I love your

company. I showed my

sister and she is telling all of her

friends and neighbors.

_ Bobby Smith Chicago, IL

“

” State Insurance Laws:

Advertising

Advertisement defined: “… a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business.”


What is considered Advertising?

Advertising – Required Logos Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright

Advertising Requirements

• Industry related logos or statements • Agent/Broker Identification (license number, etc) • Other Disclaimers (depending on the content)

Advertising – Deceptive Practices

FTC 16 C.F.R. Part 321: Mortgage Acts and

Practices -- Advertising Rule: Final Rule and

Statement of Basis and Purpose


Deceptive Practices:

• Misrepresentation of government affiliation • Inaccurate information about interest rates or loan

amount • Pre-approval or guarantee language • Claims of low ‘‘teaser’’ rates and payment amounts • Failure to disclose prepayment penalty or large balloon

payment • Claims about the monthly payment amounts

Mortgage Industry Examples

Social Media

FDIC Social Media:

Consumer Compliance Risk

Management Guidance FIL-56-2013


• Uncharted Territory • Some Industries Lagging • What is Communication and

what is an Advertisement • Need a Risk Management

Program in Place

Identify

Measure

Monitor

Control

Social Media (cont.)

How Agents & Brokers Use Social Media


• Promote the Brand • Build Relationships • Add a Face to the

Business

Risks

• Compliance / Legal • Dodd-Frank Wall Street Reform Act • Truth in Leading / Regulation Z • Truth in Savings / Regulation DD • Many others…

• Reputational Risk • Fraud / Brand Identity • Privacy • Consumer Complaints • Employee Use

• Operational Risk • Account takeover • Data Breach

Source:Financial Institution Letters – Social Media Consumer Compliance Risk Management Guidance, December 11, 2013

https://www.fdic.gov/news/news/financial/2013/fil13056.html







CAN-SPAM Compliance Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright

• Misleading Header (From / To)

• Misleading Subject Lines

• Not Disclosing Message as an Ad

• No Opt Out Option

• No Physical Address Information

Easy Ways to Violate CAN-SPAM: The law makes clear that even

if you hire another company to

handle your email marketing,

you can’t contract away

your legal responsibility to

comply with the law…

Copyrights / Trademarks

• Errors & Omissions Exposure

• Brand Erosion

• Customer Confusion

• Lost Revenue

Current or former agents, dealers or brokers using your copyrights or trademarks inappropriately creates additional risk for your company.


Misuse of Brand Assets Creates:

Corrective Action

What happens if you ignore these rules:

…pay $250,000 for deceiving

borrowers with claims of

government affiliation…

…deceived consumers… pay a $2

million civil money penalty for its

actions.

…to refund $2.9 million to

approximately 59,000 account

holders who paid fees for free

checking…

Design a Robust Program to

Find & Correct Violators

Essential elements to your program…

VISIBILITY EDUCATION ENFORCEMENT


Use technology to automate the scanning, collection and analysis of millions of data points.

How Do You Keep Track


Visibility Across Channels


Websites

Market

Places

Search

Engines

Social

Media

Mobile

Apps

Email

• Rogue Websites / Registered Domains

• False Claims / Deceptive Advertising

• Missing or Incorrect Disclosures

• Search Engine Advertising

• Social Media Profiles

• Non-Compliant Email Campaigns

Monitoring – Your Eyes and Ears

• Utilize technology to detect online violations across all internet channels.

• Create a hotline and separate email

address for consumers with concerns.

• Complaint Apps / Compliant Sites

• Monitor individual brokers, dealers or agents that are consistently a problem

• Audit marketing material regularly


A Professional Sales Culture

Companies should never expect their sales people to immediately know what to do. They need to be taught...

Solid education creates an expectation in the field and leads to a more professional sales culture.

_ Kevin Thompson

Thompson Burton PLLC Executive Q&A, February 2016

“ ”


Education is Key

Privacy Statements Disclosures Endorsements Advertising Social Media Guidance CAN-SPAM Regulation Copyright/Trademarks Misuse


Have An Escalation Strategy

Communicate specific examples, paired with Policy violation

Personal follow up (phone call) to communicate policy violations.

Withhold Commission or Other Punitive Actions


Enforcement (cont.)

Former Partners or Terminated Employees may need a more direct approach:

C&D Letter DMCA Notice

ISP Notice

Social Media

Takedown

UDRP

Litigation


Wrap-Up

• Financial Regulation Compliance is complex and covers multiple agencies – there are real penalties for not following the rules.

• You are responsible for the actions of your independent brokers, agents, dealers, or franchisees.

• These independent partners are operating in all corners of the internet.

• You need a three pronged approach to effectively manage your partner network:

• Monitoring / Detection

• Education

• Enforcement / Remediation

Thank You!

For information on MarkMonitor solutions, services and complimentary educational events:

Contact via email: [email protected]

Visit our website: www.markmonitor.com

Contact via phone: US: 1 (800) 745 9229 Europe: +44 (0) 203 206 2220

mailto:[email protected]

http://www.markmonitor.com/

managing your affiliates and partners in the financial ... partners in the financial industry ....

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