LAS VEGAS-Social media is seen by credit unions as a quick and inexpensive marketing channel. But the rush to launch that channel has led many CUs to overlook the legal ramifications that accompany a Twitter feed or a Facebook page.
That was the message from Kris Kully, counsel with Washington, D.C.-based law firm K&L Gates, who told American Credit Union Mortgage Association meeting attendees here that social networks and blogs reach nearly 80% of U.S. Internet users. "Some people spend more time on social networking or blog sites than e-mail," Kully said.
Two key characteristics of social media trigger the majority of the legal concerns, Kully said: first, there typically is interactive dialogue that is accessible to third-party observers, and second, users/consumers may actively create content.
"Social media is very dynamic-it changes all the time," said Kully. "The most commonly used social media outlets in the financial services industry are LinkedIn, YouTube, Facebook and Twitter."
As America becomes increasingly connected, mobile usage of social media is increasing-up 47% from last year, and mobile usage by people 55-plus years old has doubled.
Who Is Speaking For CU?
An important point, Kully stressed, is thinking through not only how a CU is presenting itself on social media, but also how individuals are speaking on behalf of the CU.
Kully detailed a number of common questions for CUs to consider as part of an overall social media strategy: What is the target audience? What are the associated benefits and risks? What regulations are involved, such as advertising or recordkeeping requirements? What type of pre-approval, supervision and monitoring of content should be required? Who can represent the company? Should it allow third-party postings? What are the risks of third-party content being attributed to the company?
As for the legal framework and regulatory guidance, Kully noted the Truth In Lending Act governs advertising rules, while the FTC Act and UDAAP regulate deceptive advertising, including use of endorsements and testimonials in advertising. In addition, there are "too many state requirements to list."
But it's the new sheriff in town that has everyone's attention.. "The Consumer Financial Protection Bureau has regulatory authority over financial institutions and is setting the standard on advertising and marketing activities," she said. "No one knows how far this is going to go."
The risks can be obvious or hidden, Kully said. Something as seemingly benign as a contest on Facebook falls under the regulations governing lotteries and sweepstakes. And because of how quick and easy it is to post things online and the race to be "real time," a lot of stuff gets posted without going through the regular vetting process, she said.
Among the legal tripwires to avoid: gambling restrictions affect contests, giveaways and raffles. If state law prohibits "games of chance," one option is to add a skill-based component, said Kully, such as "best" photo. Copyright infringements is another. Other elements to watch out for:
* Web page names and addresses must reflect content.
* Promotions cannot condition registration/entry upon taking an action, such as a Facebook "like."
* Monitor third-party posts and content, including employees.
* Third-party links may be seen as endorsements.
Privacy, Information Security Concerns
The Gramm-Leach-Bliley Act (Privacy Rule and Safeguards Rule), Fair Credit Reporting Act, state financial privacy requirements and state information security requirements all apply to social media. Kully said all FIs are responsible for protecting consumers' information.
"Watch for personal information being communicated on social media platforms, such as the existence of a financial relationship," she said. "Facebook can be used to promote a contest, but have another method for people to submit information if something might be personal."
CUs also must make sure their social media platforms are monitored by their IT department to detect security incidents.