Pub. 3 2013-2014 Issue 4

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S January • February 2014 9  Social Media  continued on page 10 Institution Letter, “Consumer Compliance RiskManage- ment Guidance,” on the use of social media by banks, savings institutions, and credit unions. • The Financial Industry Regulatory Authority (FINRA) published Regulatory Notice 10-06 in January 2010. • The Federal Trade Commission (FTC) published “Guides Concerning the Use of Endorsements and Testimonials in Advertising” in October 2009. All three of these documents are relatively short andmay well be worth your time to read. The FFIEC document and FTC docu- ment are both 12 pages for example, and the FINRA document is 10 pages (with the last bit of text appearing on page 9). The following sections provide a brief summary of the main points. FFIEC The FFIEC document has the following purposes: • Helping you to understand and manage the risks of social media. • Educating you about your responsibilities under current requirements. Specifically, FFIEC has made it plain that consumer protection laws and compliance laws and regulations apply to activities conducted through social media for financial institutions. • Reminding you that you have a responsibility to address the risks associated with activity on social media. The FFIEC document does not contain any new requirements to be followed. It is organized as follows: • Purpose: Industry participants asked for this guidance because they wanted to know what the members of the FFIEC would suggest for creating appropriate risk management programs. Final responsibility lies with U.S. financial institutions, not with the members of the FFIEC, but this document contains the current advice and recommendations from the FFIEC and has been adopted by its member agencies. • Background: This section provides a summary of current social media and ways in which financial institutions might make use of it. • Risk management programs: All financial institutions can benefit from having a risk management program. The size and complexity of that program depend on the financial institution’s involvement; logically enough, a regional bank with little or no social media involvement does not need as big a program as a bank that has devel- oped a heavy reliance on social media. The section about risk management programs outlines program basics such as governance structure, policies and procedures, employee training, oversight, and audits. • Risk areas: This is by far the longest section of the report and is essentially a laundry list to help financial institu - tions assess what their own risks might be. It contains 33 footnotes and a short conclusion (the conclusion being that if you assess the risks and implement a program to reduce them, your financial institution will benefit from that). One of the risk areas listed in the FFIEC document is about employees who use social media websites, but it only consists of a single paragraph. The FINRA and FTC documents both deal with this subject inmore detail. The FINRA document addresses employees’ business use of social media, not their personal use. The FTC document fills in some of that gap. FINRA The FINRA document has information on social networking and blogs. It is organized as follows: • Executive summary: The executive summary explains why this document was prepared (just like the FFIEC document, different businesses had asked for guidance) and provides contact information so you can get answers to any additional questions you might have after read- ing it. • Background: This section explains that, as a result of increasing social-media usage throughout the U.S., FINRA created a Social Networking Task Force to study how communication rules should be applied to social media sites. • The remainder of the document consists of questions and answers that have been grouped according to the general topic; for example, a section about types of interactive electronic forums contains the answers to two specific questions. FTC The FTC document has guidelines for using endorsements and testimonials in order to advertise a product. Each section consists of a general explanation followed by a series of helpful examples. The sections are organized as follows: • Purpose and definitions: The FTC uses this document to tell readers how its administration interprets the laws that it enforces by explaining the general principles, defining the terms (endorsement and testimonials, en - dorsers, products, and experts), and then listing eight examples of situations that are or are not categorized as endorsements. The last example deals specifically with a personal blogger. • General considerations: This section contains the gen- eral rules for making an endorsement. For example, it is illegal to lie about your opinions when you make an endorsement. As with the previous section, one example deals with a blogger.