It is Valentine’s Day and Sharing is Caring! More thoughts on CFPB Advisory Notice.

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Angela Cherrill- TCPAWorld’s newest blogger here. The Sicilian.  Last week the Duchess of TCPAWorld gave us some insight into the recent CFPB Advisory Notice regarding Digital Mortgage Comparison-Shopping Platforms in possible violation of RESPA Section 8 and the Czar himself provided some additional insight yesterday regarding application to ping and post transactions.

The Advisory  Notice that CFPB has outlined as a RESPA Section 8 violation was a shock to many in the digital marketing ecosystem, however; let’s not forget that last August they also published this Interpretive Rule regarding Digital Marketing Providers.    This one is a doozy!  It is 13 pages long and I am not going to dissect the entire document, but there are some highlights I would like to share.

It is Valentine’s – sharing is caring!

Cliff Notes- The Rule outlines that digital marketing providers that target and deliver advertisements using algorithms or other analytics do not meet the “time or space” exception and therefore are in violation of CFPA’s (Consumer Financial Protection Act) UDAAP prohibition.

The “Time or space” exception generally outlines traditional methods of advertising such as print and airtime wherein they are simply selling airtime or physical space, have provided some basic information about when to air particular advertisements, and the business purchasing the ad time or space was the entity that made the decision about when and where to place the ad.  This is considered a traditional media source.

Digital marketers do not live in a traditional world.

Because a digital marketer does not fall within the “time or space” exception they are considered a service provider under the CFPA.

This is applied specifically to: “A person is a “covered person” under the CFPA, and thus subject to that law, including its prohibition on unfair, deceptive, or abusive acts or practices (UDAAPs), if it offers or provides a financial product or service for use by consumers primarily for personal, family, or household purposes.⁹ “Service provider[s]” to covered persons are also subject to the CFPA, including its UDAAP prohibition. ¹⁰”

There is an exception: “The term “service provider,” however, “does not include a person solely by virtue of such person offering or providing to a covered person” either “a support service of a type provided to businesses generally or a similar ministerial service,” or “time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media.” 

I guess they consider platforms like Google and Yahoo who run paid search (SEM) strategies as companies that are offering ministerial services?

The Rule addresses the following: “The Consumer Financial Protection Bureau (Bureau or CFPB) is issuing this interpretive rule to address digital marketing providers that commingle the targeting and delivery of advertisements to consumers, such as by using algorithmic models or other analytics, with the provision of advertising “time or space.”

CFPB took the stance that “Digital marketing providers that are materially involved in the development of content strategy would not fall within the “time or space” exception as interpreted by the Bureau.”

They go on to note: “Many digital marketers target and deliver ads to specific consumers ¹ using sophisticated analytical techniques, including machine learning and behavioral analytics, to process large amounts of consumer data. ² In other words, many digital marketers aggregate and analyze immense amounts of granular consumer data, and then use that data to determine what advertisements to provide to specific consumers at what times. Accordingly, digital marketing providers commingle the service of targeting and delivering advertisements with the activities of traditional media sources in providing airtime or physical space.”

I would like to focus on footnote 1 which outlines: “The targeting and delivery of advertisements includes both the targeting and delivery of certain ads to consumers generally at specific times to increase or maximize engagement and the targeting and delivery of ads to specific consumers at specific times. For instance, a digital marketer may select certain ads to show late at night to consumers generally. Or a digital marketer may select certain ads to show late at night to certain consumers.”

What is going on in this world?  As a consumer I take issue with any government agency offering their opinion in restricting what I may or may not see on the internet “late at night” or otherwise.

They go on to say: “Further, digital marketers may harvest a wide variety of consumer data by monitoring and tracking a consumer’s web activity, including for example, their browsing history, their activity while online, and their geolocation. ³ (This is sometimes called “surveillance advertising.” ⁴) Digital marketers may also obtain data from third-party data brokers or “second-party” partnerships with other companies. ⁵ Using these tools and others, digital marketers collect granular consumer data that they analyze to develop insights about consumers’ behavior more broadly.⁶”

Don’t paint a picture that consumers are dumb and vulnerable with no knowledge or choice in restricting site technologies or what data is collected.

  1. All consumer data collected on platforms and sites are required to disclose such technologies to all users within a Privacy Policy, additionally state specific privacy laws require VERY specific additional disclosure notices.
  2. Tracking technologies that collect consumer data can be restricted and controlled at device level by users and/or offer opt-out options that the user may exercise.

I am also not convinced that digital marketing activity is harming consumers or that this is a solution that will protect consumers from harm.  I can think of a lot more issues within the financial sector that CFPB could weigh in on that would protect consumers.

I am however very concerned that this Interpretive Rule and Advisory Notice kills innovation as technology continues to improve and more so strictly prohibits a consumers choice to receive these types of targeted advertisements.

Dare I say it:  Consumers may be smart enough to know how to protect themselves and find that data shared provides great value and convenience to them within the online marketplace.

Not to beat a dead CFPB… I mean horse, but the fact that the CFPB thinks they are going to change how the internet works and restrict technology and consumer choices is quite entertaining.

We are living in a very fast-moving digital world, and the hurdles this digital ecosystem has had to sustain lately are outlandish.

Out of curiosity,  I just googled “Best Mortgage Rates Today” –

Are the companies that Google listed providing me the best mortgage rates today?   Better yet, what if there is a company who is able to actually offer me the best mortgage rate today and they were NOT listed?  Now what?  Where do we draw the line?


Spread the Love today……Compliantly- of course!


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