Pub. 11 2014 Issue 3

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 N E W M E X I C O R E A L I Z E D R E A M S Fall • 2014 13 • 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 insti- tution’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 developed a heavy reliance on social media. The section about risk management programs outlines program basics, such as governance structure, poli- cies 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 institutions as- sess 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 in more detail. The FINRA document address- es employee’s 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 reading it. • Background: This section explains that, as a result of in- creasing social-media usage throughout the U.S., FINRA created a Social Networking Task Force to study how com- munication 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 elec- tronic 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, endorsers, products, and experts), and then lists examples eight examples of situ- ations that are or are not categorized as endorsements. The last example deals specifically with a personal blogger. • General considerations: This section contains about the general rules for making an endorsement. For example, it is illegal to lie about your opinions when you make an en- dorsement. As with the previous section, there is one exam- ple dealing with a blogger. • Consumer endorsements: The idea is that if you endorse a product, you need to have enough knowledge about the product to make the endorsement, your own experience needs to support the claims you make, and if an ad claims that you are an actual customer, then that has to be true. If you are not an actual customer, then that information has to be made plain. • Expert endorsements: If someone gives an expert endorse- ment, then that person must have the necessary credentials to make the endorsement and the endorsement can’t be de- ceptive in some way. • Endorsements by organizations: Organizations consist of people with many different opinions and, often, different levels of expertise. If an organization endorses something, therefore, the organization has to have some kind of process in place to ensure that the endorsement really does fairly re- flect collective opinion about a product and also that the or- ganization as a whole is qualified to make the endorsement. • Disclosure of material connections: If a business hides infor- mation that would reasonable affect the way someone evalu- ates a product, then that information has to be disclosed. Two of the examples deal with social media (the first involves a blogger, and the second involves an online message board). Summing Up Part of being a banker is being prudent, thorough, and me- thodical. Many people consider these to be old-fashioned vir- tues, but the truth is they continue to be useful because they help financial institutions stay out of all kinds of trouble, legal and otherwise. Social media may be new, but applying these vir- tues to your policies and procedures will go a long way toward keeping you, and your company, away from the court system and the kinds of headlines that no banker ever wants to see. n