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Social Media: What a Financial Institution Needs to Know

If you do not know what social media is, then, ask one of your coworkers; pick someone under 40 years old, the younger the better. For certain, do not ask me. I have a Facebook page that one of my children set up for me, but I have no friends and no idea how to access it. I don’t tweet or chirp either for that matter. I am on LinkedIn and receive requests for people to be connected to me – which I always accept, but I do not know what that means. I could be connected with Jack the Ripper and not know it. Whether you understand social media or not, a tremendous amount of communication is being conducted using it. It is probably today where email was 10 or 15 years ago. As a matter of fact, for many young people, email is passé as a communications vehicle. My children no longer telephone me; they send a text message.

For a financial institution social media is two things. First it is a method for you to promote your financial institution and its products very inexpensively. Second, it is a way for your customers to very publicly express their opinion of your financial institution and its services. If you are not using social media as a part of your marketing program, you should explore doing so. It is an excellent and inexpensive way to reach a lot of potential customers, especially younger customers that you might not be able to reach through traditional advertising media. If you are not reviewing what is being said about your financial institution in social media, you certainly need to do that. Depending on what has been said, you may want to either emphasize it or find a way to respond.

If your financial institution is using social media for marketing, recognize that everything that the financial institution or an employee of the financial institution posts is probably an advertisement and must follow the advertising rules. If it is an advertisement, it must have the NCUA or FDIC’s advertising requirement of stating membership. If you are advertising a consumer deposit product, the Regulation DD advertising rules must be followed. Likewise, for a consumer loan, you must comply with the Regulation B and Z requirements. If the loan is designed to be secured by residential real estate, then, you need the HUD Equal Housing logo. Also, the post must follow the UDAAP rules and not be misleading. Whether the post is being done by the financial institution itself or by one of the financial institution’s employees, for example, a residential real estate mortgage lender, the same rules apply. If, for example, a financial institution employee is posting financial institution product information on his or her Facebook page, the information that is being posted must follow the advertising rules. We recommend that every financial institution have a policy that any employee who wants to post anything on a social media site that in any way involves the financial institution or the employee’s relationship with the financial institution be approved in advance of the posting by the financial institution’s compliance officer.

On the flip side, generally what most people are saying about you does not raise any compliance issues. Nevertheless, what people are saying about your financial institution is terribly important. If it is critical, it may just be an isolated incident, or it may be symptomatic of a deeper problem. There is no specific compliance regulation for compliance with Social Media, and much of the historic regulations have not truly caught up to the social media industry. Rather, you have to look at a compilation of regulations and extrapolate the applicable components. For example, advertising and UDAAP, as I mentioned. You’ll need to look at your complaint policy and procedures, human resource policies (including no expectation of privacy when using company equipment for personal use), Regulation BB Community Reinvestment Act (CRA) public file requirements for complaints, GLBA and Regulation P privacy requirements for when you want to post your customer’s name and picture at the grand opening ceremony, IT policies, Code of Ethics policy, and intellectual property and copyright regulations.

The thing that is for certain is that social media cannot be ignored. Its growth has been phenomenal and is certain to continue to expand. Social media forums are popping up every day. Like it or not, we are in the 21st century and we have to learn to play by 21st century rules.

The above article was provided to Andrews Hooper Pavlik PLC (AHP) courtesy of TriComply, the compliance arm of TriNovus. AHP does not guarantee accuracy of the information provided in the article and it should not be construed as professional advice. If you have any questions regarding this article, please contact Randy Morse, CPA, Partner and leader of AHP’s Financial Institution practice. AHP provides a broad range of accounting, auditing, tax, and consulting services to financial institutions throughout the state of Michigan and beyond.

TriComply compliance service offer banks a full compliance package that provides them with quality assistance at an affordable price. TriComply provides the TriComply knowledgebase, compliance manual, policy manual (written and reviewed), compliance newsletter (weekly), advertisement review, compliance calendar, helpful resources and an online training library of compliance webinars.

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