FFIEC Says Social Media a Risky Business for FIs

The Federal Financial Institutions Examination Council (FFIEC) has issued its final supervisory guidance regarding social media compliance and risk mitigation for financial institutions.

First introduced in January, the now finalized guidance establishes that the current consumer protection and compliance laws may apply to social media campaigns carried out by FIs. More importantly, the guidance does not discourage social media, but instead aims to help these FIs mitigate risk when going social.

FIs that choose to engage in social media “should have a risk management program that allows it to identify, measure, monitor, and control the risks related to social media.” The risk management program should scale directly with the size of the social media efforts. Social media is a strong avenue for FIs, and any company for that matter, to better engage and acquire customers, but FIs need to monitor interactions and mitigate risks to reputation and be prepared for potential complaints.

On the legal side, companies must abide by the current laws governing communications through other mediums as pertaining to social media channels when applicable. Laws such as the Truth in Savings Act, Fair Lending Laws, and Fair Credit Reporting Act, also apply to social media activities.

Given social media’s massive growth and immediate nature, financial institutions must make their efforts engaging, and also ensure that they are proactive in protecting themselves and consumers.