Thursday, June 19, 2014

Social Media: Compliance Risks of the Emoticon?

A Social Media Policy can help manage the risks: Request a free sample

Corporate concerns with social media may
be over-emphasized when you look at the real utility of social media platforms. For a loan originator using Facebook or other social media platform to try and get business, marketing efforts focus more on developing name recognition and improving search engine placement through search engine optimization efforts than actual customer relationship management.  Potential applicants do not simply seek out mortgage lenders on social media sites.  However, the appearance of a lender or particular loan officer on a search engine result, particularly at a very specific search engine result, can result in new business generation.

Lenders' concerns run from simple compliance to privacy, fair lending and reputation risks.  So, will loan originators use a social media sites to divulge corporate information?  Or could they unintentionally accept a loan application without providing the appropriate loan disclosures in a timely manner?  Or could he or she engaged and prohibited types of communication that may appear to be a discriminatory or expose a lender to other potential compliance risks? 

In fact, the greater risk potential for may exist in the area of reputation.  For example, in the midst of the mortgage crisis, as foreclosure activity soared, activists accessed lenders through their social media. To this point, lenders enjoyed a certain anonymity.1  But as the number of foreclosures escalated, the victims no longer remained faceless.  Mortgage lenders became the enemy and public exposure through blogs and social media sites quickly became a vehicle for the public to pile onto.  Bank of America, which became a target through its purchase of the Countrywide powder-keg portfolio, had to resort to "bot-like" responses simply to keep up with the volume of communication, further inflaming the anti-mortgage sentiment.

Among the compliance concerns, Fair Lending issues may take precedence as social media vehicles give "testers" wide open, anonymous access to originators, in a perfect "matched-pairs" testing environment.2  In this case, disparate impact - today's hot button issue - figures less than a direct correlation to a discriminate act.   A loan originator may simply ignore a request from an individual with a racially specific profile and invite a claim.

By definition, public communication through social media represents a form of advertising.  Ensure any messages have met your requirements for advertising.

The compliance officer and production staff must really understand how social media advances marketing efforts.  Simply, do NOT use it as a bi-directional communication tool, but as a farm for sprouting keywords and relevant topics.

Content shouldn't come directly from loan originators, but a stream of suggestions for content to a central source can achieve this goal.  Allowing or requiring content from employees (particularly originators) creates an unnecessary burden for employees to participate in social media and could create more pressure on non compliant activity than necessary. Even re-posted material should be vetted against an advertising checklist.

Perhaps the best solution revolves around providing a social media content provider - someone who will provide pre-approved content to post on social media sites.  This can add to both corporate search engine optimization benefits as well as allowing individual loan originators to improve their own business results.


Social Media Compliance Training Video - Pay attention to "Listening Technology" @ 21:00

1. Juris, J. S. (2012), Reflections on #Occupy Everywhere: Social media, public space, and emerging logics of aggregation. American Ethnologist, 39: 259–279. doi: 10.1111/j.1548-1425.2012.01362.x
2. "All Other Things Being Equal." : A Paired Testing Study of Mortgage Lending Institutions (Executive Summary). Web. 19 June 2014. <>.

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  1. The need for new business development has put pressure on the marketing departments of companies to engage in social media. The need for compliance is why we posted this story, but the applications of social media and social media managers is featured in this National Mortgage News article:

  2. Businesses who share their content on social media are sending "brand-signal" to search engines, thus increasing your SEO rankings in search engines.Social Network

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