Once again, as Spooky Season rolls around, here at ActiveComply we like to share with the world some findings from our Wall of Shame folder - real social media posts captured in our system that highlight the sometimes darker side of social media advertising in our regulated industry. Findings range from RESPA Section 8 violations, to consumer complaints, to good old fashioned brand reputation issues. Take a peek, if you dare, at these frightening social media violations to ensure similar Social Media Scaries won't haunt your institution!
RESPA Violations
RESPA (the Real Estate Settlement Procedures Act) is a federal law established in 1975 to protect homebuyers from predatory lending practices. One main goal? Prohibiting kickbacks, referral fees, and other bribes between settlement service providers. This is primarily outlined in RESPA Section 8, where Things of Value are discussed. If gifts are given or accepted as part of an agreement for the referral of business, they are strictly prohibited. In the below example, a loan officer indicates that referral sources who work with him could expect "weekly" fishing trips. Though fishing might not be everyone's cup of tea, it would certainly be seen as a Thing of Value by a regulator.
Brand Reputation Issues
The use of social media for the posting of memes or for personal opinions opens a wide array of risks for the institution. The FFIEC has outlined that Reputation Risk is one of the core concerns for institutions on social media. When a financial company’s employee makes potentially discriminatory remarks on social media, consumers begin to wonder if the institution may discriminate against them during the loan process. Regulators seeing similar content could use these types of findings as part of a fair lending examination. Brand reputation is one of the most valuable assets an organization has today and once it is compromised it can exceedingly difficult to repair. In the below example, the loan officer not only posts a meme with inappropriate language and racial slurs, but also includes controversial imagery, such as a weapon.
Consumer Complaints
Consumer complaint management is one of the core tenets of a strong Compliance Management System (CMS). It is a regulatory expectation that institutions should establish clear policies and procedures for consumer complaints, including: discovery of complaints, evaluation of the nature of the complaint, prompt response to the consumer, and ongoing reporting to identify systematic trends needing remediation. Consumer complaints are one of the most common reasons an exam may be opened for an institution. In the below example, we see different consumer complaints that have clear fair lending implications. Complaints such as these are of particular interest to examiners and may come with costly implications for the institution.
Don’t Be Another Social Media Horror Story
You don’t have to become another story in the news, nor reap the negative effects of an errant social medial post. There are steps you can take to avoid regulatory and other violations committed innocently – or not – through social media.
- Policy: Have clear policies and protocols in place to deal with infractions – and make sure your employees understand them. This includes clear policies on sticky topics like social justice movements and politics. Risk tolerance can vary by institution. Ensure your executive team agrees with where your institution draws the line.
- Training: Have employees participate in a social media training program at hire and at least annually. Have employees sign an attestation acknowledging that they are aware of the company policy.
- Monitoring: Implement robust social media monitoring that can catch problems before they end up on an exam report. You’ll want to monitor for fraudulent accounts made under your company’s name, as well as the social media postings of your employees for potential violations of industry regulations or company policies.