VIDEO: CFPB Guidance on Consumer Reviews
In this Compliance Clip (video), Adam talks about a policy guidance that the CFPB issued on March of 2022. Specifically, the policy guidance provides information about potentially illegal practices relating to consumer reviews and how these may lead to violations of the Consumer Financial Protection Act
This topic is actually included in our Spring 2022 Quarterly Compliance Update.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about the CFPB policy guidance on consumer reviews. What we're talking about is when consumers provide reviews on social media sites or websites for a certain product or service, and specifically, we're talking about how that relates to financial products and services.
On March 22, 2022, the CFPB issued policy guidance regarding potentially illegal practices relating to consumer reviews. This is a topic that we covered in our Spring 2022 Quarterly Compliance Update, because at that time this was something that was new, and of course, we cover all new material in our quarterly compliance updates. So if you want more information about what happened during that prior quarter, take a look at our quarterly updates at compliancecohort.com/store.
In this guidance, specifically, the CFPB says that they aim to ensure that customers can write reviews, including those posted online, about financial products and services that accurately reflect their opinions and experiences. As a background, I'm somebody who enjoys internet marketing and understands the internet marketing world, and one of the things that a lot of internet marketing companies do, internet marketers and companies, do is that they utilize consumer reviews. From observation, you and I can see that when we go to amazon.com or other websites, and we see a product that has a high rating and has a lot of customer reviews, we believe that that product is probably good. Therefore, that gives us a comfort level to purchase and use that product. Now, the problem is that some black cat online marketers have said that, “Oh, customers feel good. They buy more when there's good reviews. So let's create reviews”, and they're creating reviews that are not legitimate. That's where the problem comes into play. That's what the CFPB is talking about here. There are some reviews that are not honest and not accurate feedback. So, the CFPB is looking specifically as it relates to the financial sector in this guidance.
What the guidance does here is it also emphasizes that practices such as posting fake reviews or inserting clauses in your contracts with customers that forbid your customers from publishing an honest review may actually violate the Consumer Financial Protection Act. Now, many of you are compliance professionals. Others of you may be in the loan department or deposit department. This is something you may want to pass on to your marketing teams and their third party vendors that do marketing services for your financial institution. This is something that's very important to understand that when we’re providing customer reviews for financial products and services, we have to make sure that they're not only accurate, but that we're not forcing customers to provide reviews that they may not have otherwise provide in a truly honest and open environment. That's what the CFPB is looking at through this guidance.
Now, the CFPB issued policy guidance, which describes practices related to customer reviews that are generally unlawful under the Consumer Financial Protection Act. Some of these typically unlawful practices include things like contractual “gag” clauses, where consumers are not allowed to give a negative review; a fake review, where people are hired who don't even utilize a product or service and give a fake review to make the product or service look like it is legitimate or good; and review suppression and or manipulation. So review suppression or manipulation would be “let's just filter out all the bad reviews and delete those, so nobody sees those. Only provide the good reviews so that everybody thinks that we're not a problem.” Though these three things are a problem under the Consumer Financial Protection Act, what the CFPB says is that financial companies will face consequences for illegally manipulating or suppressing consumer reviews.
Again, this probably doesn't affect most of you directly, but this is something you want to pay attention to and pass onto your marketing teams and their third party providers that provide marketing services for your financial institution. It is very important that your reviews are honest, and there's an integrity behind those reviews. Otherwise, the CFPB and the other regulators are going to have a problem with that, and you're going to have a problem with compliance.
Well, that's it for this Compliance Clip.