Your brand has a strong marketing campaign to help you stay ahead of the competition. But how confident are you that your marketing won’t catch the eye of the regulatory agencies in charge of protecting consumers? The FTC, CFPB, FCC, and DOE—just to name a few—are always on the lookout to stop companies with misleading or deceptive marketing practices by bringing enforcements against them. Enforcement actions, more often than not, come with heavy monetary penalties that could damage your brand’s bottom line and no doubt its reputation.
Some of these regulators have been around for decades, while others have entered the arena only recently. All of them, though, carry out enforcement actions on a regular basis and take consumers’ concerns seriously, which is why every brand should be constantly monitoring their marketing for compliance with the laws the regulators impose.
So, who are the toughest regulatory agencies when it comes to marketing compliance? Let’s take a look:
Federal Trade Commission (FTC)
As part of their ongoing consumer protection responsibilities, the FTC has charged a wide range of companies with unfair, deceptive, or fraudulent practices, including department stores, debt collection companies, and health brands.
When it comes to marketing compliance, the FTC’s main targets are native advertising campaigns, false endorsements, deceptively worded advertisements, and threatening forms of marketing. Lord & Taylor made headlines this year for failing to disclose that their native advertisements were actually paid promotions. Traditionally highly regulated industries continue to get hit with hefty fines too. This past January, two payday lenders were charged with illegally charging consumers undisclosed and inflated fees. Each has paid $2.2 million and collectively waived $68 million in fees charged to consumers. Director of the Bureau of Consumer Protection, Jessica Rich, said about this case:
Payday lenders need to be honest about the terms of the loans they offer. These lenders charged borrowers more than they said they would. As a result of the FTC’s case, they are paying a steep price for their deception.
Having obtained $2 billion in redress and disgorgement and charging $21.8 million in civil penalties in 2015 alone, the FTC is not slowing down. They’re backed up by their extensive database of consumer complaints, the Consumer Sentinel Network, which collected over 3 million complaints in 2015.
Consumer Financial Protection Bureau (CFPB)
The “new” kid on the block, the CFPB, has hit the ground running by tackling huge household names in consumer finance. Founded in 2011 under the Dodd-Frank Act, the CFPB has not been afraid to exercise its regulatory power against lenders, banks, credit card issuers and others.
The CFPB’s main targets are consumer financial companies engaged in false or deceptive marketing that could trick consumers into making financial decisions or purchasing products they otherwise would not. Just last week, the First National Bank of Omaha was hit with a $32.2 million enforcement action for deceptive marketing of debt cancellation add-on products. Over the past few months, Santander was ordered to pay $10 million for deceptively marketing its overdraft service, and last year, Citibank was ordered to pay $700 million for illegal credit card practices.
The CFPB has wrung massive fines from companies. From April 1, 2015 to March 31, 2016, the CFPB provided $139 million in redress to over 177,000 consumers and announced orders resulting in approximately $6 billion in total relief for affected consumers.[ii] The CFPB also maintains a consumer complaint database containing over 900,000 consumer complaints and key data and trends on consumer sentiment towards various industries. (Check out our CFPB Risk Signal Report for how these trends may affect your business.)
Federal Communications Commission (FCC)
They’re not around just for regulating telephone and internet networks. The FCC maintains rules and regulations involving the Telephone Consumer Protection Act (TCPA), including policies regarding the Do-Not-Call List, to ensure that consumers only receive calls they consented to. Major companies like Bank of America and HSBC have had to pay out millions this year in TCPA settlements.
In addition, the FCC monitors and carries out enforcement actions against marketers using deceptive tactics to sell communications products, such as prepaid calling cards and wireless phone services. This past February, the FCC announced a $29.6 million fine against four long-distance carriers for fraudulent, deceptive, and manipulative practices targeting consumers. The FCC carried out another hefty fine last year, when they fined six companies $30 million for deceptive marketing of prepaid calling cards.
The FCC has its own consumer complaint database for all consumer issues related to communications products. Since October 31, 2014, the FCC has received over 580,000 consumer complaints, with 200,000 complaints related to telemarketing alone.
Department of Education (DOE)
The DOE has a heavy hand in protecting a certain type of vulnerable consumers: students. On top of creating policies guiding public school curricula and protecting students’ civil rights, this agency has used its authority over federal student financial aid to regulate the marketing practices of for-profit colleges and student loan providers.
This past July, as part of an enforcement action, the DOE cut off federal student financial aid to Medtech College’s three campuses upon discovery of “egregious misrepresentation of job placement rates,” based on gainful employment regulations. Though Medtech didn’t receive a fine, the school can no longer receive $16 million in Pell Grants and federal student loans it had received before this enforcement action occurred, and the college must post a letter of credit worth $36.6 million to receive full certification.
The DOE has shown it won’t let for-profit colleges escape gainful employment regulations either by simply converting to non-profit status. Federal financial student aid and losses through letters of credit are on the line for these higher education institutions.
Protecting Your Company Against Enforcement Actions
Deceptive and misleading marketing practices have been the subject of a number of news stories this year, many of them involving big-name brands getting slapped with multi-million dollar fines. This regulatory momentum shows no sign of stopping. Constant monitoring of your marketing messages is vital in this age of consumer protection. Learn how to monitor your marketing channels for compliance and brand protection.
[ii] Consumer Financial Protection Bureau. (June 30, 2016). Semi-Annual Report Spring 2016. Retrieved from http://www.consumerfinance.gov/data-research/research-reports/semi-annual-report-spring-2016/; Consumer Financial Protection Bureau (November 20, 2015). Semi-Annual Report Fall 2015. Retrieved from http://www.consumerfinance.gov/data-research/research-reports/semi-annual-report-fall-2015/
[iii] Federal Communications Commission. (November 25, 2015). Enforcement Fines: The Collection Process. Retrieved from https://www.fcc.gov/news-events/blog/2015/11/25/enforcement-fines-collection-process
[iv] Federal Communications Commission. CGB – Consumer Complaints Data [Data file]. Retrieved from https://opendata.fcc.gov/Consumer-and-Government-Affairs/CGB-Consumer-Complaints-Data/3xyp-aqkj
[v] Office of Inspector General and U.S. Department of Education. Semiannual Report to Congress, No. 72, October 1, 2015-March 31, 2016. Retrieved from http://www2.ed.gov/about/offices/list/oig/semiann/sar72.pdf; Office of Inspector General and U.S. Department of Education. Semiannual Report to Congress, No. 71, April 1, 2015-September 30, 2015. Retrieved from http://www2.ed.gov/about/offices/list/oig/semiann/sar71.pdf