NEW YORK-With the FFIEC accepting comment until March 25 on proposed new social media rules for financial institutions, one analyst has suggestions on how institutions can most effectively use those channels while not running afoul of regulators and lawsuits.
Mercedes Kelley Tunstall, counsel at Ballard Spahr, LLC, asserted that financial institutions first need to determine their reasons for using social media, whether that's marketing, customer/member service, encouraging dialogue or purely public relations. Institutions that hope to have an active discussion over those channels need to have internal policies in place to properly regulate that, and those FIs should have employees trained to engage members in that discussion, said Tunstall, who was one of three analysts that spoke recently as part of a webinar presented by American Banker, a sister publication of Credit Union Journal.
Many CUs have looked to social media as another channel for member service, and Tunstall noted that the same rules apply to social media member service as with all other channels. In fact, she said, when members reach out to the credit union via social media, it's best to identify the problem and then push them into more traditional channels as quickly as possible.
Not A Documentary Channel
"If you're using Twitter, it is not a documentary channel, and you can't keep track of the conversation that occurs there in any meaningful way," she said. "And you want to stay away from encouraging customers to post their personal and account information through third-party sites."
Facebook and Twitter can be great sources for encouraging customer/member dialogue, she said, but FIs that do that need to remember to take the good with the bad-especially because it could have an effect with regulators.
"It is most important to make sure that the executive team understands that there could very well be people that post and say very bad things about the bank, and the bank's products and services," she said. "If you edit out the bad comments, then you begin to take on liability for the comments that you leave. If you edit out the bad comments, everything else that is posted there has to be accurate, because now you've become an editor of the comment and endorsed whatever else is left there."
Exposure To Liability
In addition, when a commenter has both good and bad things to say about the institution, FIs should avoid editing portions of comments to only include the positive content. "That doesn't work, because that could expose you to liability for what's being stated. You have to take the entire comment or none of the comment at all," she said.
Tunstall cautioned that any press releases issued via social media should follow the same policies and internal controls as any other communication issues by the organization.
Among the top social media risks identified by the Federal Financial Institutions Examination Council (FFIEC) are that it's an informal channel, occurs in a less secure environment than other communications, and exposes FIs to more risk, including reputational risk.
"Because of the informal nature of social media campaigns, there is a tendency internally for banks to say 'We're going to let this go and we don't need to put all of the trappings and controls around it,'" said Tunstall. "That's not true. All the same rules apply. You should have just as much control around your social media as you do for other activities."
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