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Financial Services Law Insights and Observations

Banking Regulators Finalize Social Media Guidance

FDIC CFPB Federal Reserve OCC NCUA FFIEC Social Media Agency Rule-Making & Guidance

Consumer Finance

On December 11, the FFIEC, on behalf of the CFPB, the FDIC, the OCC, the Federal Reserve Board, the NCUA, and the State Liaison Committee, released final guidance on the applicability of consumer protection and compliance laws, regulations, and policies to activities conducted via social media by federally supervised financial institutions and nonbanks supervised by the CFPB. The guidance was finalized largely as proposed. However, in response to stakeholder comments, the regulators clarified certain provisions. For example, the final guidance clarifies that traditional emails and text messages, on their own, are not social media. The final guidance also explains that to the extent consistent with other applicable legal requirements, a financial institution may establish one or more specified channels that customers must use for submitting communications directly to the institution, and that a financial institution is not expected to monitor all Internet communications for complaints and inquiries, but should take into account the results of its own risk assessment in determining the appropriate approach regarding monitoring and responding to communications. The regulators also clarified that the guidance is not intended to provide a “one-size-fits-all” approach; rather financial institutions are expected to assess and manage the risks particular to the individual institution, taking into account factors such as the institution’s size, complexity, activities, and third party relationships. The final guidance also contains further discussion regarding the application of certain laws and regulations to social media activities, such as the Community Reinvestment Act. Finally, consistent with other recent regulatory initiatives, the final guidance clarifies that prior to engaging with a prospective third party an institution should evaluate and perform due diligence appropriate to the risks posed.