How much of an impact do regulatory actions and consumer protection have on a business? Given the recent examples of federal agencies coming down hard on the side of consumer protection, it’s clear that compliance in every interaction with consumers must continue to be a top-of-mind consideration in the C-Suite, as well as throughout every company. With the help of RegTech (regulatory technology), every business has the opportunity to use new technologies to solve their regulatory and compliance requirements effectively and efficiently.
Regulatory Violations Tarnish Household Names
First National Bank of Omaha’s recent regulatory downfall stemmed from their disregard for consumer protection laws. Their $32.25 million fine comes after the CFPB discovered that roughly 257,000 consumers were harmed by illegal practices with credit card add-on products. The Consumer Financial Protection Bureau (CFPB) has accused the bank of using deceptive marketing to lure consumers into debt cancellation add-on products and claims it charged consumers for credit monitoring services that they never received.
The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits unfair, deceptive, and abusive acts and practices (UDAAPs) such as these, and gives federal agencies like the CFPB the authority to take action against any institution violating them.
However, these federal regulators aren’t targeting just the banking industry, but any company with business practices that could potentially harm consumers. Earlier this year, Lord & Taylor settled charges with the Federal Trade Commission (FTC) for failing to disclose that their native ads were paid commercial advertising and deceiving consumers with these ads. The consequence for Lord & Taylor wasn’t just the financial setback they suffered from legal action, but also the damage done to the company’s reputation.
National Attention on Consumer Protection
With many large companies in the headlines lately as regulators investigate misrepresentations or potentially deceptive acts, the topic of consumer protection has gained a lot of attention, including on the campaign trail from Presidential and senate candidates.
So while the push for consumer protection has become more urgent, companies are facing an unprecedented time where consumer-facing marketing has for the most part become technology-dependent and data-driven. Today’s marketers have more channels to manage than ever before, and making sure their marketing communications are correct – everywhere they appear – isn’t easy in today’s vast marketplace. Because of this, many companies find it challenging to balance innovation with brand protection.
That’s why RegTech has become so important. RegTech solutions solve regulatory and compliance requirements more effectively and efficiently in this omni-channel marketing world.
How Businesses Can Jump Start Their Compliance Plans
It’s imperative in today’s world that businesses have a solid compliance plan in place to stay out of the watchful eye of federal regulators. So how can it be done?
Here are a few ways to begin to establish a solid plan:
- Create Goals: What does a business want their compliance plan to accomplish, what should they protect consumers from, how can they ensure all of their partners are following these requirements and what are the steps they are going to take to carry out that plan? These are just a few of the many goals that need to be discussed when developing the plan. Companies need to think about where the biggest areas of risk are and which regulations apply to their business. Once businesses know what they need to protect consumers from, it becomes easier to develop the compliance plan.
- Get Ahead of the Game: When thinking about how to ensure marketing compliance in content and consumer interactions, marketers and their compliance teams need to remember to be proactive and to constantly monitor all the channels their business’ marketing appears on. It’s important that there is a system in place that can do round-the-clock monitoring in order to manage risk and catch potential violations that could lead to federal investigations if left unchecked. Waiting until something bad happens to begin thinking about a compliance plan is too late. RegTech solutions that automate this monitoring are imperative to help companies move fast while monitoring for compliance
- Stay Informed: With the main focus on protecting the consumer, regulators are continually carrying out investigations, enforcements and rules updates. Compliance teams need to stay up-to-date on the current regulations by the CFPB, FTC, FCC and other regulatory agencies to constantly update their compliance monitoring programs and adapt to changing regulations and learnings from industry enforcements.
It’s clear now that no industry is immune to regulatory oversight. As marketing becomes more diverse, remaining compliant with consumer protection laws gets even more difficult. There are many ways to establish a compliance plan that can cover all of a business’s marketing channels, but it is imperative that a plan is in place.
By using RegTech to automate everyday compliance processes, companies can move quickly to innovate and grow without the constant worry of brand safety. If your business needs more assistance with monitoring for marketing compliance, look into our PerformLine platform. Our cloud-based platform makes compliance less complex and time-consuming allowing businesses to create efficiencies in their compliance practice, mitigate risk and have the Proof You Can Use™ to make monitoring for compliance as painless as possible.