marketing filters: how micro-targeting and fair lending ...€¦ · social media marketing a...

nefma.org2018 Fall Conference

MARKETING FILTERS:

How Micro-Targeting and Fair Lending

Don’t Mix

Pamela Buckley, CRCM

Managing Principal, Capco

Jamie Belmore

AVP Marketing, Main Street Bank


Agenda

➢Target Marketing

➢Understanding Unfair, Deceptive or Abusive Acts or

Practices (UDAAP)

➢Social Media Marketing

2


TARGET MARKETING

3


Micro-Targeting on Social Media = Risk

• HUD recently filed a formal complaint against Facebook

– Alleges advertisers engaged in housing discrimination using “targeted advertising” tools

thus violating the Fair Housing Act

• Screens-in or out prospective buyers based on race, color, religion, sex, familial

status, national origin, disability, zip code

– US Attorney for Southern District of NY filed a statement of interest in US District Court,

which HUD joined, on behalf of a number of private parties regarding the potential liability

of Facebook

• The SEC recently charged five separate parties for using social media in ways that violated

the Testimonial Rule

4


Target Marketing is a Good Thing, Until it Isn’t!

Tip: Avoid using marital status, age, sex, gender and other protected classes when developing new marketing strategies.

5

Marketing Plan/Goal: Increase residential mortgage loans

Strategy: Target first-time home buyers

Product: Existing product(s)/term(s)

Filters: #newlyweds, #divorced, #25-45, #female, #household


Facebook Won’t Promote Ads for Housing


Instead: Create Open Invitations



Tip: Determine how to balance attracting new customers

while avoiding fair lending, including redlining issues.

6

Marketing Plan/Goal: Increase small business lending

Strategy: Increase small dollar loans to build deposit base

Product: Open LOC, SBA, Conventional, C&I

Filters: #womenentrepreneurs, #minorityowned,

#anythingbutrestaurants, #lowtomoderateincome,

#crimestatistics


Instead: Target by Interests, not Demographics



Tip: Be mindful of the focus on lending to low- and moderate-income borrowers and geographies, vs. targeting high-income

and high net worth borrowers.

7

Marketing Plan/Goal: Grow deposit base/increase deposit share

Strategy: High income, professional occupations, Retirement

referrals

Product: Tiered products and benefits

Filters: #10topcollegealumni, #highincomecensustracts,

#nochildrenhouseholds, #transgenderequality,

#Americanassociationofmensnursing


Instead: Target by Location


Target Marketing - Best Practices

Let’s talk about keeping things in check:

• Service Level Agreements

• Details of marketing filters

• Risk Assessing partnerships and sub partners

• Revenue analysis vs consumer harm

• Vendor Management Plus+

• Proactive look-back

8


UNDERSTANDING UDAAP

9


UDAAP – General Provisions• Federal Trade Commission (“FTC”) Act

– The primary statutory authority on “Unfair or Deceptive Acts or Practices” (“UDAP”) pre-Dodd-Frank

– Prohibits financial institutions and other persons from engaging in acts that are considered “unfair or deceptive”

– A general underlying theme among Federal regulations

• Covered person– Any person that engages in offering or providing

• A financial product or service to consumers

• Primarily for personal, family, or household purposes

– Section 5 of the FTC Act• Prohibits fraud and deception in connection with all US commerce

• Consumer as well as business-purpose, industrial and agricultural transactions are all covered

• States have UDAAP statutes as well

10


UDAAP – Unfair

It causes or is likely to

cause substantial injury

to consumers

The injury is not

reasonably avoidable

by consumers.

The injury is not out-

weighed by countervailing

benefits to consumers or

the competition

An act or practice is Unfair when:

11


UDAAP – Standards for Determination

Standards for an Unfair Act or Practice:

• Injury: Usually involves a

monetary loss, not a loss that

is emotional or speculative in

nature

• Substantial: one consumer

loses a large amount of money

or a small amount of money is

lost by a large number of

consumers

Substantial Injury Test

• If the consumer can

reasonably avoid being

injured, the act or practice is

not unfair

• If the act or practice is

deemed unfair, even

avoidance of injury by the

consumer will not result in a

determination that the act or

practice is fair

Avoidance Test

• Injury minor compared to overall

benefit to consumers- Not unfair

• Consider Public Policy: Will the

public benefit from the act or

practice and if so, does that

benefit outweigh any foreseeable

harm?– Public benefit outweighs

harm- Not unfair

– Foreseeable harm outweighs

public benefit- Unfair

Cost-Benefit Analysis

12


UDAAP – Deceptive

An act or practice is Deceptive when:

The representation,

omission, act, or practice

misleads or is likely to

mislead the consumer

The consumer’s

interpretation of the

representation,

omission, act, or practice

is reasonable under the

circumstances, and

The misleading

representation, omission,

act, or practice is

material

13



Standards for a Deceptive Act or Practice:

• Making misleading claims

• Failure to mention negatives

• Consider:

‒ Advertisements

‒ Regulatory disclosure

documents & electronic

disclosures

‒ Face-to-face discussions

‒ Course of dealings

‒ Look at context

Misleads or is Likely

to Mislead

• Consider what is reasonable

for that group

• What would a reasonable

consumer consider in his/her

decision?

‒ Cost

‒ Benefits

‒ Restrictions

‒ Express claims

Reasonable Consumer

• Likely to affect a consumer’s

decision relating to the

product or service

• Examples

‒ Express claims made

with respect to the

product or service

‒ Information that is likely

to be considered important

by consumers

Material

14



Deceptive

Is the statement prominent enough for

the consumer to notice?

Is the information presented in an easy

to understand format that does not

contradict other information?

Is the placement of information in a

location where consumers can be

expected to look or hear?

Is the information in close proximity to

the claim it qualifies?Proximity

Promience

Presentment

Placement

15


UDAAP – Abusive An act or practice is Abusive when:

Materially interferes

with the consumer’s

ability to understand

a term or condition

of a consumer

financial product

or service; or

Takes unreasonable

advantage of a

consumer’s lack of

understanding of the

material risks, costs,

or conditions of the

product or service; or

Takes unreasonable

advantage of a

consumer’s inability

to protect his or

her own interests in

selecting or using a

consumer financial

product or service; or

Takes

unreasonable

advantage of the

reasonable reliance

by the consumer

on a covered

person to act in the

interests of the

consumer.

16


UDAAP is Everywhere

• UDAAP is anywhere and everywhere– Any person that engages in offering a product or service to consumers or

businesses • FTC Act and the Dodd-Frank Act cover any financial institution that offers or provides

loans and deposits to consumer and commercial customers

– Applies to all products and services offered directly or indirectly • Also applies to all stages of the product lifecycle

– Product creation

– Advertising

– Underwriting and pricing

– Billing, servicing and collections

– Complaints

– Termination of the customer relationship

– UDAAP is not mutually exclusive of other regulations either

17


UDAAP - Marketing Best Practices

• Ensure all marketing collateral is complete and accurate

• Cannot mislead the average member of the target market

• No explanation is omitted or missing

• Overall impression of marketing message is accurate, and

– Message attracts attention

– Wording is understandable

– Information is located where consumers are expected to look

18


Have a Policy in Place


Example: All Product Messages are Within 1-Click of

Disclosures/Explanation


Social Media Marketing

19


Social Media Marketing

A Necessity

• “We don’t have a choice on whether we do #socialmedia, the question is how well we do it.” – Erik Qualman

• “Social media is here. It’s not going away; not a passing fad. Be where your customers are: in social media.”– Lori Ruff

• “Social media is not just an activity; it is an investment of valuable time and resources.” – Sean Gardner

Requires Special Handling

• “Random social media tactics lead to random results. You need a strategy.” – Stephanie Sammons

• “When creating a social media campaign, make sure you know your audience well.” – Liz Azyan

• “Content builds relationships. Relationships are built on trust. Trust drives revenue.” – Andrew Davis

20


Social Media Platforms for Marketing

• LinkedIn

• Twitter

• Facebook

• Instagram

• YouTube

• Pinterest

21


Guidance from Regulatory Agencies

• The Financial Industry Regulatory Authority (FINRA) – Guidance on Blogs and Social Networking Sites; Regulatory Notice 10-06

– Communications with the Public; Communications Rule 2210-2216

– Guidance on Social Networking Websites and Business Communications; Regulatory Notice 17-18

• The Securities and Exchange Commission (SEC)– Division of Investment Management’s Guidance on the Testimonial Rule and Social Media

• The Federal Financial Institutions Examination Council (FFIEC) – Final Guidance on Social Media

• The SEC’s Office of Compliance Inspections and Examinations (OCIE) – Risk Alert: The Most Frequent Advertising Rule Compliance Issues Identified in OCIE

Examinations of Investment Advisers

22

http://www.finra.org/industry/notices/10-06

http://www.finra.org/industry/notices/12-29

https://www.finra.org/industry/notices/17-18

https://www.sec.gov/investment/im-guidance-2014-04.pdf

https://www.ffiec.gov/press/pr121113.htm

https://www.sec.gov/ocie/announcement/risk-alert-advertising


Micro-Targeting on Social Media = Risk

• HUD recently filed a formal complaint against Facebook

– Alleges advertisers engaged in housing discrimination using “targeted advertising” tools

thus violating the Fair Housing Act

• Screens-in or out prospective buyers based on race, color, religion, sex, familial

status, national origin, disability, zip code

– US Attorney for Southern District of NY filed a statement of interest in US District Court,

which HUD joined, on behalf of a number of private parties regarding the potential liability

of Facebook

• The SEC recently charged five separate parties for using social media in ways that violated

the Testimonial Rule

23


Implications for Financial Institutions

• Financial institutions are not immune to scrutiny of social media marketing

– Could be downstream implications if party to transactions that originated via discriminatory marketing practices

• Marketing compliance is still required – similar to traditional channels

– Character limitations or inability to support the use of graphics (e.g., “Equal Housing Lender” could limit use of certain social media platforms)

24


Have a Policy in Place


Be Inclusive! Share “Real” Content


Key Takeaways for Social Media Marketing

1. Follow guidelines for required statements

2. Consider which areas of Graham-Leach-Bliley Act or other

privacy regulations impact how you protect clients that interact

with your organization via social media

3. Assess how your organization uses certain features of social

media marketing to obtain email addresses through user

interactions and utilize this in future marketing efforts

4. Ensure proper usage of disclosures

25


Key Takeaways for Social Media Marketing (cont.)

5. Be aware of guidelines for endorsements and testimonials,

especially through blogs or social media influencers

6. Ensure messages are properly formatted for the specific

social media platform including when viewed on various

devices

7. Effectively manage any third party vendors that design or

create social media marketing messages or make media

buys on behalf of your organization

26


Thank You for Your Participation

27

marketing filters: how micro-targeting and fair lending ...€¦ · social media marketing a...

Documents