Creative and attention-grabbing marketing is a skill that many fintech companies have mastered. However, federal financial and consumer protection regulators are increasing their oversight of marketing materials related to financial services such as banking products, securities trading, and investment advice. Fintech companies looking to expand into different types of services should proceed with caution when creating advertising and public materials, as different regulatory frameworks may apply to different services.
The pitfalls are increasing and the dangers can be greater for the unwary. Aside from the threat of direct oversight and immediate action by regulators, fintech companies are concerned that questionable marketing practices create obstacles to strategic partnerships with banks, brokerages, and other financial services companies, or that they simply threaten customers. You may find that it can confuse your base.
A thorough legal review of marketing materials, websites, mobile apps (and app store listings), and social media posts is important to ensure that the descriptions accurately constitute the activity, represent capabilities, and provide oversight and It helps ensure that it can withstand intense regulatory attention.
regulatory atlas
Depending on a company's activities, marketing regulation can originate from a variety of sources, including:
- for Investment advisors and their fintech corporate partners, the Investment Advisers Act of 1940 (Advisers Act), including the anti-fraud provisions, specifically Rule 206(4)-1 (Marketing Rules). The Marketing Regulations generally regulate fraud in advertising and include specific requirements regarding performance advertising, endorsements and testimonials, and third-party reviews, among others.1
- for Broker-dealers and their fintech corporate partnersthe Securities Exchange Act of 1934 (Exchange Act), the rules adopted by the Securities and Exchange Commission (SEC) under the Securities Exchange Act (including the SEC's Regulation Best Interest), and the Financial Industry Regulatory Authority (FINRA). Promulgated regulations.
- for Banks and their fintech corporate partners parties that provide deposit products, the Federal Deposit Insurance Act (FDIA) and its implementing regulations, the Truth in Savings Act and its implementing regulations, and third-party interagency guidance (such as certain neobanks and banking-as-a-service models); Relationship: Risk Management.2 The Dodd-Frank Wall Street Reform and Consumer Protection Act also prohibits unfair, deceptive, or abusive acts and practices.
- for Non-bank financial institutions and fintech companies How we offer financial products and support laws enforced by the Federal Trade Commission (FTC). These include, for example, the FTC Act's prohibition on unfair or deceptive advertising practices and the Gramm-Leach-Bliley Act's (GLBA) prohibition on obtaining or attempting to obtain a customer's financial information by false pretenses.
These regulations are consistent in some sense. For example, we are concerned about financial services companies using false or misleading information or engaging in deceptive sales tactics. However, in other respects they can be very different. For example, while customer testimonials are treated with skepticism under the Advisers Act, they are not subject to the same level of scrutiny in the context of banking services (unless they are deceptive or fraudulent). misleading). As part of complying with applicable regulations, fintech companies must carefully manage these differences.
our interactive table Outlines the types of marketing activities that may be affected by various federal regulations applicable to advisors, broker-dealers, banks, and nonbank financial institutions. The interactive table serves as an easy-to-use guide, highlighting key areas of regulatory focus and applicable guidance.
practical notes
Fintech companies must ensure that their marketing materials and public statements are consistent with these rules, whether they are directly regulated or indirectly regulated through a partnership with a regulated body. You need to be proactive and vigilant in checking. Marketing is a common enforcement area for federal regulators of financial services providers; SEC, F.D.I.C. others Federal banking agencies, Consumer Financial Protection Bureau, and F.T.C. We actively enforce marketing regulations.
Fintech companies should also keep in mind the following practical considerations:
- Be careful with social media posts: The same marketing rules apply to social media posts created by fintech companies and sometimes third parties. Fintech companies should carefully evaluate their use of social media. Be especially careful when using platforms that don't allow you to edit your posts later and require you to keep records of your social media communications for a period of time.
- Notice Regarding Third-Party Communications: Content distributed by third parties, even if created by unaffiliated third parties, may constitute marketing or advertising by the Financial Services Company or its partners. For example, third-party emails forwarded to customers by a fintech company affiliated with a broker, or the website content of a third-party bank linked to its own website by a fintech, May be considered advertising by tech companies. Similarly, fintech companies are responsible for what third parties say on their behalf. For example, if a company uses social media influencers to market its services, the company could potentially be held liable for violations of applicable law by those influencers.
- Establish comprehensive policies and procedures: Fintech companies should regularly conduct risk assessments and develop separate policies and procedures for dealing with advertising and other communications. This includes establishing a formal review and approval structure for all advertising content by the Chief Compliance Officer or equivalent legal advisor to ensure full regulatory compliance.
[1] Following the adoption of the Revised Marketing Regulations, the Examination Department published a Risk Alert in 2022 and a Risk Alert in 2023 setting out specific focus areas of the Marketing Regulations in the examination.
[2] Interagency Guidance on Third-Party Relationships: Risk Management provides banks with risk management guidance to follow when dealing with third-party partners, including fintech companies, and to assess whether the risks can be appropriately mitigated. The FDIA and its implementing regulations require nonbank companies to support claims related to deposit insurance and to provide certain disclosures when advertising deposit insurance.
