It is not just job seekers and politicians who need to be careful about what they post on Facebook. Now mortgage lenders will have to take a look at how they present themselves and their companies on all social media, from Facebook and Twitter to blogs, forums and sites that have not even been invented yet.
In January, the Federal Financial Institutions Examination Council (FFIEC) released proposed guidance regarding how lenders use social media. The guidance does not impose new rules on banks, savings associations, credit unions and other entities supervised by the Consumer Financial Protection Bureau (CFPB) and state regulators. Instead, the FFIEC explains in a press release, the guidance is intended to make these institutions understand the potential consumer compliance, legal, reputation and operational risks associated with the use of social media, along with expectations for managing those risks.
‘They don't tell you what to do, but you have to have a plan for how to deal with those four areas of risk,’ says Rick Grant, president of Rick Grant & Associates, a public relations and marketing agency based in Jim Thorpe, Pa.
Financial institutions use social media not just for advertising, but also to facilitate applications, respond to feedback and maintain relationships with customers. There are rules regarding how lenders may advertise, such as the Truth in Savings Act, the Equal Credit Opportunity Act, the Truth in Lending Act and others. The proposed guidance directs lenders to develop a risk management program related to these laws and social media.
Grant believes that lenders can look at social media two ways: as a source of risk that will require a mitigation plan or a new opportunity for doing business with consumers (a scenario that carries both risks and rewards). He adds that consumers want to interact with banks online and not just to check their balance.
That consumer trend is an important reason to develop social media policies and procedures.
"Advertising is one-way communication, and social media is two-way communication,’ says Tim Ferrell, director of digital strategy and the interim chief marketing officer at Residential Finance Corp. in Columbus, Ohio. ‘If you are not engaging your audience in conversation with social media, you'll soon find you are talking to yourself.’
Residential Finance Corp. uses Facebook, a blog and YouTube videos. Those venues can be current and relevant, and the immediacy presents certain challenges.
‘With a print ad, there is plenty of time to sit down and think of content and have thorough legal reviews,’ Ferrell says. ‘With social media's spontaneity, it's hard to participate without having concerns about legal compliance.’
Another challenge is that messaging on social media must often be succinct, so it is difficult to print the necessary disclaimers. Also, well-intentioned employees might go online to promote their employers' services and run afoul of certain regulations. Ferrell says that having a distributed sales force makes it especially difficult to keep everyone on message.
‘We don't monitor our employees' individual social media presence, but we do ask them to understand that if they post something online, they are an employee of the company, not just an individual,’ Ferrell says. ‘We do regular training on social media. We have very specific policies on social media, on what's permitted and what's not.’
Not all banks have these policies in place, says Jonathan Foxx, president and managing director of Lenders Compliance Group in Long Beach, N.Y. Foxx recently took an informal poll among approximately 200 financial services companies, and two-thirds did not have written policies for employees using social media.
‘The fact is they didn't have an employee manual,’ Foxx says. ‘You can have policies and procedures, but if you are going to ask employees to participate, you have to have something in their hands.’
Foxx believes that employees should be trained on what to do if they find someone trolling, or posting inflammatory remarks in an online community.
‘What happens if you get onto a social media site and you see your company is being maligned by another poster?’ he asks. ‘Should you respond and put him in his place? Or should you pass it upstream to management?’
The relevant departments should discuss how best to control information coming into social media.
‘The narrative is an important feature to the firm that is being serious about its social media network,’ Foxx says. ‘If you are not controlling the narrative, then the Internet will control it.’
But, increasingly, lenders are paying closer attention.
‘Most companies are attentive to what employees post,’ says Dustin Hobbs, communications director for the California Mortgage Bankers Association in Sacramento. ‘The standard is if you want to post something, you have to go through several layers of approval.’
The proposed guidance was published in the Federal Register, and the FFIEC is accepting comments until March 23.
Nora Caley is a Denver-based freelance writer. She can be reached at firstname.lastname@example.org.