QUESTION
One thing we have always been confused about is how we can use
eligibility information from affiliates. The part about affiliate marketing
that particularly confuses me is if we do not use eligibility information from
an affiliate, but the affiliate uses its own eligibility information to market
on our behalf. So, our question is, if we do not use eligibility information
from an affiliate, but the affiliate uses its own eligibility information to
market on our behalf, is the marketing that the affiliate does on our behalf
covered by affiliate marketing provisions?
ANSWERS
I know this may seem somewhat complicated, but it is more
straightforward than you think. If certain conditions are satisfied, the
affiliate marketing provisions would not apply. But the details, like so much
else, are important to consider.
So long as a financial institution does not use eligibility information
in a manner that would constitute the making of a solicitation for marketing
purposes, such solicitation is not covered by the affiliate marketing
provisions where:
1. The affiliate of an institution uses its own
eligibility information that the affiliate obtained in connection with a
pre-existing business relationship it has or had with the consumer to market
the institution’s products or services to the consumer; or,
2. The affiliate of the institution directs its service
provider to use the affiliate’s own eligibility information that the affiliate
obtained in connection with a pre-existing business relationship it has or had
with the consumer to market the institution’s products or services to the
consumer, and the institution does not communicate directly with the service
provider regarding that use of the information. [12 CFR § 334.21(b)(4); 16 CFR §
680.21(b)(4); 12 CFR § 222.21(b)(4); 12 CFR § 41.21(b)(4); 12 CFR §
717.21(b)(4)]
One observation is worth considering: the ability of a financial
institution to have an affiliate use the affiliate’s own eligibility
information, as described above, to market the products or services of the
financial institution provides a significant alternative to certain standard
notice and opt out procedures.
Affiliate marketing rules of the federal financial institutions
regulators and the FTC specify additional requirements regarding the
involvement of service providers in a solicitation in order to avoid having the
solicitation be subject to the affiliate marketing provisions. Refer to the FTC’s
affiliate marketing rules for more details. [12 CFR § 334.21(b)(5); 16 CFR §
680.21(b)(5); 12 CFR § 222.21(b)(5); 12 CFR § 41.21(b)(5); 12 CFR §
717.21(b)(5)]
Jonathan Foxx
Managing Director
Lenders Compliance Group
