You'd be hard-pressed to find a credit union marketer or compliance officer not overwhelmed by the nuances of today's advertising regulations. With every regulation, product and channel comes a new set of rules. Complicating matters is the emergence of new marketing methods and technologies rule makers haven't even contemplated.
Much of the innovation the marketing industry is experiencing is borne of the desire to use data to offer the right consumers the right product at the right time. The big data revolution, combined with a more audible consumer voice, is driving marketers in many industries to take a closer look at tools that help identify these “right” individuals. Credit union marketers, though, must be cautious when implementing these tactics. Although the spirit of their aspirations may be good natured, the compliance implications they could generate may be damaging.
Take fair lending, for example. Multiple enforcement actions have changed the way credit unions have to think about fair lending compliance. The CFPB uses complex algorithms to determine a financial consumer's race and ethnicity. Complying with the agency's unwritten standard is already challenging; add in emerging marketing techniques, and it becomes extremely difficult.
Consider geofencing. Marketers use this technology to create a virtual fence around certain locations. When consumers enter that area, they receive messages, alerts, discounts, perks or other information to their mobile devices. Compliance-minded credit unions will understand the potential a practice like this could have for violating fair lending and other requirements. Yet, no guidance specific to the use of geofencing exists today.
Big data strategies, too, present possible trouble spots. The most sophisticated analytics in the world is nothing without accurate, and in some cases, real-time information. To address this, more credit unions are taking a look at how they gather, warehouse and transfer what can be highly private and personal nuggets of information throughout their organizations. As credit unions design their data acquisition plans, data security and privacy has to be a part of the conversation. However, cybersecurity regulations are only just beginning to enter the scene. Although the Federal Financial Institutions Examination Council has released a new tool to help credit unions better evaluate their cybersecurity preparedness, on-the-books regulations are not yet in place.
Teeny tiny screens create another compliance challenge. As marketers develop campaigns for delivery on smartphones and smart watches, not to mention Internet of Things objects, disclosures are a potential trouble spot. It's no secret rules and regulations have not kept up with quickly changing marketing delivery methods. So, marketers and others are left to apply sometimes decades-old guidance to cutting-edge technology. It's sort of like trying to fit the proverbial square peg into a round hole. For example, we are all too familiar with the “clear and conspicuous” standard that many regulations require for disclosures. But, what does that mean within the confines of digital channels? In many cases, the answer remains to be seen.
First-adopter credit unions with staff members who find value in envelope-pushing products and marketing technologies are often left to interpret what compliance looks like. That's because regulators simply have not yet contemplated how these emerging systems and methods will impact consumers.
Compliance and innovation can work hand in hand. Marketers, product managers, compliance officers and other leaders need to first understand the spirit of consumer protection laws. They can then work together to demonstrate (in writing!) that the spirit, as well as any related rules, regulations, laws or guidance, was considered as the plan was developed and executed.
Cindy Williams is vice president of regulatory compliance for PolicyWorks. She can be reached at 515-221-1850 or [email protected].
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