Federal regulator cautions that consumer protections apply to "Big Tech" marketing tactics
The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule that outlines when and how consumer financial protections apply to digital behavioral marketing. The move comes as so-called "Big Tech" firms become more sophisticated in their advertising and targeting of consumers.
In a statement, the CFPB made clear that marketing of financial products - even by nontraditional providers - subjects a company to the guidelines of consumer financial protection laws.
“When Big Tech firms use sophisticated behavioral targeting techniques to market financial products, they must adhere to federal consumer financial protection laws,” said CFPB Director Rohit Chopra. “Federal and state law enforcers can and should hold these firms accountable if they break the law."
The new rule spells out the implications for digital marketers who also offer financial products or who actively participate in content strategy development on behalf of financial product firms.
When digital marketing providers go beyond traditional advertising, they are typically covered by the Consumer Financial Protection Act as service providers. The Act contains an exception for companies that solely provide time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media. However, the CFPB stated today that the exception does not cover firms that are materially involved in the development of content strategy.
The CFPB outlined two implications in today's announcement:
- Digital marketers provide material services to financial firms: A material service is one that is significant or important. Digital marketing providers are typically materially involved in the development of content strategy when they identify or select prospective customers or select or place content in order to encourage consumer engagement with advertising. Digital marketers engaged in this type of ad targeting and delivery are not merely providing ad space and time, and they do not qualify under the “time or space” exception.
- The CFPB, states, and other consumer protection enforcers can sue digital marketers to stop violations of consumer financial protection law: Service providers are liable for unfair, deceptive, or abusive acts or practices under the Consumer Financial Protection Act. When digital marketers act as service providers, they are liable for consumer protection law violations.