On compliance: Social media risk management

New FFIEC guidance clarifies that existing rules apply to new media

by. Steve Van Beek
The same advertising disclosure rules that apply to a newspaper ad also apply to a Facebook ad, according to guidance from the Federal Financial Institutions Examination Council, released in December. This clarification from the FFIEC – and, specifically, the lack of any exemptions from existing rules for social media – increases the risks facing credit unions using social media.

Indeed, FFIEC’s new guidance on social media risk management doesn’t impose any new requirements on credit unions, but rather clarifies that existing requirements and supervisory expectations apply to new media. Because FFIEC includes the National Credit Union Administration and because the State Liaison Committee has encouraged state regulators to adopt this new guidance, it applies to both state- and federally chartered credit unions.

The guidance defines social media broadly, as a “form of interactive online communication in which users can generate and share content through text, images, audio, and/or video.” Examples include Facebook, Google+, Twitter, blogs, and such consumer review websites as Yelp, Flickr, YouTube and LinkedIn.

Implications for Risk Management

Engaging with members in social media is not a free lunch. Credit unions using social media face increased compliance, legal, operational and reputation risks. A key component to a credit union’s social media approach needs to be a comprehensive risk management program. FFIEC’s guidance indicates that a successful program includes:

  • a governance structure with clear roles and responsibilities and a directive from the board or senior management on how social media contributes to the strategic goals of the credit union;
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