The Consumer Financial Protection Bureau (CFPB) recently issued an interpretive rule (rule) to address digital marketing providers. Financial institutions such as credit unions may use these providers for advertising, which may also help with other activities such as member acquisition and marketing analysis. These providers “aggregate and analyze immense amounts of granular consumer data, and then use that data to determine what advertisements to provide to specific consumers at what times.” Some types of data points these providers may aggregate are account openings and a member’s search history. These providers may allow credit unions to target certain types of members with specific advertising services.
The rule outlines who is subject to the Consumer Financial Protection Act (CFPA) and its prohibitions, including the prohibition against unfair, deceptive, or abusive acts or practices (UDAAP). The rule applies to “covered persons.” A covered person is a “person [who] offers or provides a financial product or service for use by consumers primarily for personal, family, or household purposes.” In addition, service providers to “covered persons” are also subject to the Act. The Act defines a “service provider as ‘any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service.” The definition may also include “a person that ‘participates in designing, operating, or maintaining the consumer product or service [or] processes transactions relating to the consumer financial product or service.”
However, there are exceptions to who may constitute a service provider. A service provider may not include a person who ‘solely by virtue of such person offering or providing to a covered person…a support service, [or] time or space for an advertisement for a consumer financial product or service through’ traditional media and electronic media. The rule finds digital marketing providers that are deeply involved in the content strategy, which allows a credit union to identify and acquire potential members, provide a “material service” and may be considered service providers.
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