There are a few key risk considerations in social media marketing that mortgage professionals should understand. No doubt, social media is a powerful tool for business development within the mortgage industry. There are many positive examples of its use in gaining market share and engagement for loan officers and lending institutions. But as a mortgage professional, we need to always be conscious of the potential risks associated with using social media. Facebook, Twitter, and LinkedIn are the predominant channels, and leading originators recognize that these networks are an incredibly powerful validator – not only as a way for employees and potential customers to confirm the legitimacy of your institution, but also as a true extension of your organization’s brand.
The potential gain of leveraging the social media channel must be balanced with the legitimate risk inherent with these evolving social platforms. The risk considerations in social media marketing can be categorized into 4 groups: Regulatory, Financial, Operational, and Reputational.
There are more than 34 published regulations that govern communication and advertising. A key risk consideration for social media marketing is that the regulators now apply these regulations to social media communications – despite the fact that they were originally written before the existence of the internet, let alone social media platforms. These regulations include, but are not limited to:
- Truth in Lending Act/Reg Z
- Equal Credit Opportunity Act/Reg B
- Fair Housing Act
- Real Estate Settlement Procedures Act/Section 8
- Fair Debt Collection Practices Act
- Unfair, Deceptive or Abusive Acts or Practices/Sec 5
- Deposit/Share Insurance Disclosures
- Bank Secrecy Act
- Advertising/Notice of National Credit Union Administration Share Insurance
- Non-Deposit Investment Products
- Electronic Fund Transfers Act/Reg E
- Anti-Money Laundering Act
- Community Reinvestment Act
- Gramm-Leach-Bliley Act
- CANN-SPAM Act
- Children’s Online Privacy Protection Act
A major risk consideration in social media marketing is the financial impact of non-compliance with one or more of the many regulations named above. If social media posts are not properly reviewed or violations of regulations are not addressed promptly, sanctions, fines, legal fees, interest, and loss of revenue can quickly amass.
The nature of social media can allow for quick and easy communications between 2 parties. A key risk consideration in social media marketing is the operational risk surrounding the gathering of personal data and prospecting for business outside of approved operating procedures. These activities can cause inefficiencies in a loan originating engine and/or open an institution to auditing issues with data collection occurring outside of the system(s) of record.
Corporate accounts are vulnerable to hacking, which can result in inappropriate remarks being posted on social media by nefarious actors. But organizations also face social media marketing risks from inappropriate and unintentional posts by legitimate employees who indicate their place of employment on their personal social media profiles. This affiliation to an organization creates a direct correlation back to the noted company, leaving the door open for social media savvy citizens to trace and attach their potentially negative comments back to the institution and its business philosophy. It can be incredibly difficult to repair this type of damage.
To learn more about how social media can be leveraged as an exciting new business development tool, and how best to navigate and protect your institution in this delicate regulatory environment, check out this webinar from MGIC and Optimal Blue:
The opinions and insights expressed in this blog are solely those of its author, Greg Schroeder, and do not necessarily represent the views of either Mortgage Guaranty Insurance Corporation or any of its parent, affiliates, or subsidiaries (collectively, “MGIC”). Neither MGIC nor any of its officers, directors, employees or agents makes any representations or warranties of any kind regarding the soundness, reliability, accuracy or completeness of any opinion, insight, recommendation, data, or other information contained in this blog, or its suitability for any intended purpose.