Website and Social Media Compliance Scrutiny

• November 12, 2018
• CLA Regulatory Compliance Team

More and more examiners are closely reviewing websites and social media posts for compliance with federal consumer protection regulations. Your Compliance Management System (CMS) should include periodic advertising compliance testing, including your website and social media posts. You should retain written evidence of this testing, the results, and any necessary follow up to address detected violations.

During our testing of websites and social media posts, one of the more frequent violations we find involves closed-end loans. Regulation Z, 12 CFR 1026.24(d) states that if an advertisement includes any of the following information, further disclosures are required:

• The amount or percentage of any down payment.
• The number of payments or period of repayment.
• The amount of any payment.
• The amount of any finance charge.

What we see are financial institution websites and social media posts promoting something like “30 year mortgages available” or “5 year auto loans” and not including required disclosures. By stating the period of repayment, the following disclosures are required:

• The amount or percentage of the down payment.
• The terms of repayment, which reflect the repayment obligations over the full term of the loan, including any balloon payment (you may include a unit-cost example such as, “60 monthly payments of $31.83 per $1,000 borrowed.”)
• The “annual percentage rate,” using that term, and, if the rate may be increased after consummation, that fact.

Your CMS should include website and social media compliance testing, whether that testing is performed internally or by a third party. Given the attention paid by examiners to website and social media compliance with federal consumer protection regulations including Regulation Z, be prepared to show examiners that you have it covered.

 

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