Managing Your Affiliates and Partners in the Financial Industry

Transcription

1 Managing Your Affiliates and Partners in the Financial Industry Daniel Morton Product Marketing Manager MarkMonitor

2 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

3 The Web of Financial Regulations

4 A confusing web Graphic Credit: US Government Accountability Office (GAO)

5 Regulations on top of regulations. 178,277 71,224 1,933% 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) Source: Regulatory Studies Center, George Washington University

6 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.

7 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 Actions of your Brokers/Agents/Franchisees Marketing Practices Consumer Communication

8 Privacy Statements Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright The Financial Privacy Requirements of the Gramm-Leach-Bliley Act Must be: Clear, Conspicuous and Accurate Reasonably Understandable designed to call attention to the significance of the information Can be: Hyperlinked from main page and transaction page

9 Disclosures Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright When are they needed? Advertising must Be truthful and not misleading Have evidence to back up claims Be fair How should they be displayed? CLEAR and CONSPICUOUS Close to triggered claim Take account of devices used for viewing ad Use hyperlinks must be clearly labeled Repeat disclosures if necessary Source:.com Disclosures: How to Make Effective Disclosures in Digital Advertising FTC, March 2013

10 Disclosures Industry Specific Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright Insurance Industry: Full Legal Name of Insurance Company Location of Principal Office Listing of states where insurer is licensed Some states want License number Mortgage/RE Industry: Identification as Broker or Salesperson Licensing authority name. NMLS identification number

11 Endorsements & Testimonials Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright FTC Section 5 (15 U.S.C. 45) PART 255 GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS IN ADVERTISING Must: 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 State Insurance Laws: 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

12 Advertising Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright What is considered Advertising? Advertisement defined: a commercial message, in any medium, that is designed to attract public attention or patronage to a product or business.

13 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)

14 Advertising Deceptive Practices Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright FTC 16 C.F.R. Part 321: Mortgage Acts and Practices -- Advertising Rule: Final Rule and Statement of Basis and Purpose Deceptive Practices: Mortgage Industry Examples 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

15 Social Media Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright FDIC Social Media: Consumer Compliance Risk Management Guidance FIL Identify Uncharted Territory Some Industries Lagging What is Communication and what is an Advertisement Need a Risk Management Program in Place Measure Monitor Control

16 Social Media (cont.) Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright How Agents & Brokers Use Social Media Promote the Brand Build Relationships Add a Face to the Business Risks Source:Financial Institution Letters Social Media Consumer Compliance Risk Management Guidance, December 11, 2013 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

17 CAN-SPAM Compliance Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright The law makes clear that even if you hire another company to handle your marketing, you can t contract away your legal responsibility to comply with the law Easy Ways to Violate CAN-SPAM: Misleading Header (From / To) Misleading Subject Lines Not Disclosing Message as an Ad No Opt Out Option No Physical Address Information

18 Copyrights / Trademarks Privacy Statements Disclosures Endorsements Advertising Social Media CAN-SPAM Trademarks/Copyright Misuse of Brand Assets Creates: 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.

19 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

20 Design a Robust Program to Find & Correct Violators

21 Essential elements to your program VISIBILITY EDUCATION ENFORCEMENT VISIBILITY EDUCATION ENFORCEMENT

22 How Do You Keep Track VISIBILITY EDUCATION ENFORCEMENT Use technology to automate the scanning, collection and analysis of millions of data points.

23 Visibility Across Channels VISIBILITY EDUCATION ENFORCEMENT Rogue Websites / Registered Domains False Claims / Deceptive Advertising Websites Market Places Missing or Incorrect Disclosures Search Engine Advertising Social Media Profiles Non-Compliant Campaigns Mobile Apps Social Media Search Engines

24 Monitoring Your Eyes and Ears VISIBILITY EDUCATION ENFORCEMENT Utilize technology to detect online violations across all internet channels. Create a hotline and separate address for consumers with concerns. Complaint Apps / Compliant Sites Monitor individual brokers, dealers or agents that are consistently a problem Audit marketing material regularly

25 A Professional Sales Culture VISIBILITY EDUCATION ENFORCEMENT 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

26 Education is Key VISIBILITY EDUCATION ENFORCEMENT Privacy Statements Disclosures Endorsements Advertising Social Media Guidance CAN-SPAM Regulation Copyright/Trademarks Misuse

27 Have An Escalation Strategy VISIBILITY EDUCATION ENFORCEMENT Withhold Commission or Other Punitive Actions Personal follow up (phone call) to communicate policy violations. Communicate specific examples, paired with Policy violation

28 Enforcement (cont.) VISIBILITY EDUCATION ENFORCEMENT Former Partners or Terminated Employees may need a more direct approach: C&D Letter DMCA Notice UDRP ISP Notice Social Media Takedown Litigation

29 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

30 Q&A

31 Thank You! For information on MarkMonitor solutions, services and complimentary educational events: Contact via Visit our website: Contact via phone: US: 1 (800) Europe: +44 (0)