CFPB interpretation includes digital marketing providers

On August 10, the CFPB issued an interpretative rule stating that digital marketing providers who are involved in the identification or screening of potential customers or the selection or placement of content to affect consumer engagement, including the purchase or adoption behavior, are subject to the jurisdiction of the CFPB. The rule ostensibly clarifies the scope of companies that are “service providers” under the CFPA to include digital marketing providers, and thus subjects them to the authority of the CFPB to prohibit UDAAPs.

CFPB jurisdiction generally applies to a “covered person”, which is “any person who undertakes to offer or provide a financial product or service to consumers”. The Bureau’s jurisdiction also extends to “service providers” who provide a “material service” to a covered person in the context of offering a financial product or service to consumers. However, the term “service provider” does not include those who provide either (i) “a helpdesk service of a type provided to general businesses or a similar ministerial service” or (ii) “time or space for an advertisement for a consumer financial product or service through print, newspaper or electronic media. »

The rule of interpretation states that digital marketing vendors are service providers to the extent that they are involved in developing content strategy, identifying or selecting potential customers, or selecting or placing content to encourage consumer engagement with advertising. The CFPB also said that digital marketers engaged in this type of targeting and ad serving are not just providing ad space and time, and are not eligible for the exception. “time or space”.

The rule also explains that “states and other consumer protection officials can sue digital marketers” who can be held liable for UDAAPs. In a related statement, CFPB Director Rohit Chopra said that “[w]hen big tech companies use sophisticated behavioral targeting techniques to market financial products, they must abide by federal consumer financial protection laws.

Put into practice : The rule is critical for third-party data providers, including many marketing strategy companies who will be subject to scrutiny, particularly if the CFPB considers the data to be a vehicle for discrimination, which the CFPB has said. recently considered a UDAAP (see our previous blog post here). In addition, the CFPB has routinely held service providers liable for knowingly or recklessly providing “substantial assistance” to companies that violate consumer financial services laws. Such substantial assistance is deemed to violate the law to the same extent as the person to whom such assistance is provided. In the context of digital marketing providers, the use of the Substantial Assistance Enforcement Mechanism may re-emerge as a common means for the CFPB to pursue parties who otherwise would not appear to have directly engaged in an activity. illegal.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 230

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