According to regulatory agencies, lenders and their partners bear the responsibility of being transparent about their product offerings. More often than not, though, consumers sign up for unintended products or services because of misleading or deceptive advertising. Now that the CFPB accepts consumer complaints about financial services and is creating more regulations around mortgage lending, marketplace lending, and payday lending, marketers in these industries have more reason to be concerned about the way they attract consumers under the watching eyes of the government. Misleading or deceptive marketing practices can result in costly fines and penalties that ultimately hurt a company’s bottom line.
Last week, Rachel Hirsch of Ifrah Law and David Morgan of PerformLine led a webinar on “When Responsible Lending Turns Irresponsible” to discuss what federal regulatory agencies are looking out for when it comes to marketing and advertising. If you are a lender, a banking partner who originates loans, or a lead generator driving traffic to lenders, read on for three takeaways from the webinar that should be top of mind.
- Regulators are not just concerned about your business and marketing practices, but also what your partners and third-party relationships are doing. Regulators recently have been going after upstream relationships (those who collect information about consumers and pass it off to companies, e.g. lead generators) and downstream relationships (who handle further outreach/marketing to the consumer on your behalf, e.g. marketing agencies). Last July, the CFPB ordered Santander Bank, N.A. to pay a $10 million fine for illegal overdraft service practices involving a telemarketing vendor. The vendor deceptively marketed the overdraft service and signed bank customers up for the service without their consent.
- One subpoena can balloon into a cluster of legal activity that can hurt your bottom line. Paying legal counsel to handle subpoenas, lawsuits, and settlements gets expensive, never mind the potential multi-million dollar cost of resulting fines and penalties. Although there is no way to truly quantify the impact of legal activity on businesses (since most investigations are private), what we can tell from investigations that have gone public is that legal costs skyrocket once regulators begin an investigation against a company. Thus, it can be more cost-effective to be proactive about detecting and remediating potential violations than to react to federal investigations.
- Federal agencies have been going after non-compliant individuals, not just business entities. Individuals who are responsible for non-compliant activity in their company are at risk of putting their reputations on the line. This past May, the CFPB took action against a former Wells Fargo employee for an illegal mortgage-fee-shifting scheme. Individual employees can no longer hide under the umbrella of a larger organization.
Listen to the full recording of the webinar available here.
PerformLine frequently holds webinars on regulatory trends and best practices in marketing and advertising compliance. Want to receive updates on our next webinars? Sign up for our mailing list by filling out the “Subscribe” box below.