Influencer Guidelines for Financial Institutions

QUESTION

We have affiliates that sell products and services. As the Compliance Manager, I was recently tasked by our CEO to make sure that we are not giving the impression that we’re recommending something being sold by our affiliates, even if our websites already mention their products and services. This seems like a contradiction. 

On the one hand, we are told to not recommend the affiliates’ products and services, and, on the other hand, we are told to make sure our websites mention them. 

Are there some guidelines we can follow to make sure we are not promoting the products and services while also mentioning them on our websites?

ANSWER

These days, there is a term for the power to affect the purchasing decisions of others. It’s called an “influencer.” You may have heard this term in the last few years. It is associated often with social media. The influencer is somebody who supposedly has the authority, knowledge, relationship, position, expertise, experience, and competence to “influence” somebody’s purchasing decisions. In fact, there are courses now available for people to learn how to be an influence!

The world of financial services has its own form of influencers. And the scenario you describe is one such instance where influence crosses into regulatory territory. That territory is the regulatory framework of the Federal Trade Commission (FTC). Using the FTC standards, it is possible to provide a set of guidelines that, hopefully, will make it possible for you to both mention the affiliates’ products and services without giving the impression that you are promoting them without proper disclosure.

The FTC has the power to issue trade regulation rules declaring acts, practices, and conduct in or affecting interstate commerce to be unfair or deceptive practices. As a point of reference, Dodd-Frank generally displaced the FTC with the CFPB as the coordinator of consumer complaints and principal regulator regarding consumer financial products or services provided by banks, federal savings association, and nonbank creditors (except for motor vehicle dealers).

Prior to the enactment of Dodd-Frank, the FTC Act required banking regulators to issue similar rules within 60 days after an FTC rule’s effective date, unless the banking agency found that similar acts and practices of depository institutions were not unfair or deceptive. Although, Dodd-Frank deleted this requirement, financial institutions may still find it worthwhile to understand FTC rules, if only to understand the rules with which their FTC-regulated competitors must comply.

So, the following is a brief list of guidelines that my firm would be considering if we were doing an audit your scenario. It is based on years of working with FTC standards and website reviews. If we were to do an audit, there would be many other moving parts to consider, including an influencer disclosure review, but I think this outline will give you a head start!

Influencer Guidelines for Financial Services Affiliates 

• The institution (“influencer”) should clearly and conspicuously indicate the relationship between the influencer and its affiliate (i.e., “we’re affiliated companies owned by the same parent company”).
• If the other company (the affiliate) gives the influencer a benefit in return for mentioning its products and services, the influencer should mention that benefit (i.e., “we receive [compensation/similar promotion by [the other firm]] in return for mentioning its products and services”).
• The influencer should treat tags, likes, pins, and similar ways of showing the influencer likes a product or service as endorsements that require disclosures.
• The influencer should place each disclosure so it’s hard to miss. A disclosure should appear along with the endorsement message and should not appear only if the viewer must click more to reach it.
• The influencer should not mix the disclosure with a group of hashtags or links, although the disclosure could include a hashtag such as #ad or #sponsored.
• If an endorsement appears in a picture on a platform like Snapchat or Instagram Stories, the disclosure should be superimposed over the picture in a way that ensures viewers have time to notice and read it.
• If the endorsement appears in a video, a disclosure should appear both in audio and in video as part of the video and not just in a description uploaded with the video and not only in words superimposed on a video.
• If the endorsement is made in a live stream, the disclosure should be repeated periodically so viewers who see only part of the stream will get the disclosure.
• Disclosures should use simple and clear language, without vague or confusing terms such as uncommon abbreviations or shorthand.
• A disclosure should be in the same language as the endorsement.
• An influencer should not assume that a platform’s disclosure tool is sufficient, but should consider using that tool in addition to the influencer’s own, good disclosure.
• An endorsement should be honest and truthful. For example, an influencer should not mention experience with a product the influencer has not tried, or say the product is terrific if the influencer thinks it’s terrible, or make up a claim that would require proof the influencer does not have.
• The influencer should ensure its disclosures are made, not rely on someone else to make them.

Jonathan Foxx, Ph.D., MBA

Chairman & Managing Director

Lenders Compliance Group