The Consumer Financial Protection Bureau ("CFPB") is a U.S. government agency charged with ensuring that consumers are treated fairly by banks, lenders, and other financial institutions. In connection with this directive, the CFPB has turned its attention to financial firms that use targeted advertising to reach consumers. The recently issued CFPB Advertising – interpretive rule – identifies the circumstances in which digital marketing companies may be held accountable for violating federal consumer financial protection laws. According to the CFPB's Advertising rule, "[d]igital marketers 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 [emphasis added]." Once considered a "service provider," marketers are then exposed to a new range of potential regulatory liability. In order to be sure that your business' marketing plans are compliant with these regulations, it is best to consult with an experienced Internet marketing attorney.
CFPB Advertising: Digital Marketers Have "Transformed Advertising"
Historically, in order to advertise products and services, businesses employed traditional marketing methods, typically the purchase of "time and space" for television commercials or newspaper ads. According to the CFPB, marketing companies that provide time and space advertising for financial products and services generally fall within an exception to the Consumer Financial Protection Act ("Act"). But as the Internet marketing channel has exploded over the years, so too have the advertising methods of digital marketing agencies. Much of the marketing campaigns of today are tailored based upon a consumer's digital interactions with advertisements, also known as behavioral advertising, which is targeted at an individual's Internet use and profile based on associated data collection over time. This transformation is the genesis for the recent CFPB Advertising interpretive ruling: once marketing agencies are not merely providing time and space, they may need to comply with the Act.
How Does the CFPB Advertising Rule Apply to Your Marketing Efforts?
A key takeaway from this interpretive ruling relates to the way financial product/service firms use behavioral analytics to reach potential customers. Specifically, the CFPB Advertising rule explains that, "depending on how these practices are designed and implemented, behavioral marketing and advertising could subject firms to legal liability." Once a digital marketing company is deemed to have provided a financial services company with "material services," consumer regulatory agencies may now bring an action against the marketer to put an end to any violations of the Act.
Prior to issuing the interpretive rule, the CFPB's historical enforcement actions occasionally involved digital marketing companies. For example, in a case against multiple parties, including a marketing company and its owner, the CFPB alleged that the defendants violated the Telemarketing Sales Rule by misleading, and charging thousands of consumers illegal upfront fees in a nationwide student-loan debt-relief operation. In another matter, the CFPB finalized an order against multiple parties for collecting debt-relief fees from consumers and misleading them regarding such fees.
CFPB Advertising Rule Should Raise Concerns for Marketing Companies
The new interpretive ruling has effectively placed Internet marketing companies on notice as to the types of advertising campaigns that could easily subject them to a brand-new kind of liability: actions under the Consumer Financial Protection Act. In order to prevent this type of lawsuit from reaching your doorstep, it is crucial that you discuss your marketing strategies with attorneys with decades of experience in the industry.
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