Social media has become the primary avenue for personal networking and communications, and therefore is also an increasingly important part of companies' marketing and advertising strategies. Social media offers the opportunity for companies to instantly interact with new and current customers across various platforms. The benefits of social media, however, can also pose risks to financial institutions that are subject to numerous regulations, privacy requirements, and consumer protection laws. Financial institutions must be vigilant and careful in controlling the communications that are disseminated through social media, both with or without their knowledge or permission. Examples may include a tweet promoting deposit account products through social media that leaves out language required by the Truth in Savings Act or exposes the institution to consumer litigation, a Facebook posting that inadvertently references private consumer information, or an inappropriate and untrue comment about a competitor posted by an employee that identifies themselves as a representative of the institution.
The FFIEC recently issued its proposed guidance on the risks posed by social media. The proposed guidance sets forth some best practices that financial institutions should consider, including instituting a risk management program that identifies and monitors the proper use of social media. Financial institutions should review their social media policies to ensure that they describe the proper, and improper, uses of social media by employees or representatives. For example, any advertising or solicitation must be made through the authorized channels and should be approved in advance. Employees should be warned that they should not hold themselves out as representatives of the company when making statements on their own personal accounts.
Do not allow the informal and instant nature of social media to cause you to lose control of your message.
The policies and practices above are the first step in managing the risks of social media while enjoying its benefits. Financial institutions are encouraged to ensure that their social media policies are up to date and consistent with the FFIEC's guidance.
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