Social Media Influencers & Compliance Considerations

By Leora Ruzin

In the age of digital marketing, there are many different methods that mortgage companies might utilize to promote their offerings and attract potential customers. One strategy that would have been unthinkable even just a couple of decades ago is the increasing use of social media influencers to boost brand visibility and credibility. However, while relatively new and innovative, this marketing strategy comes with a unique set of compliance considerations within the mortgage space. Lenders must be sure to carefully navigate strict regulatory pitfalls in order to maintain compliance and consumer trust. So what are the key compliance considerations for mortgage companies when considering the use of social media influencers? Let’s dig into this unique and evolving landscape.

Understanding Social Media Regulations

There are several major regulations that govern a mortgage company’s online voice. These must be carefully followed to avoid legal consequences, both from the lender’s perspective and by the influencer that they wish to partner with. Here are a few primary examples:

  1. Truth in Advertising: The Federal Trade Commission (FTC) mandates that all forms of mortgage advertising must be truthful and backed by evidence. Influencer endorsements are considered a form of advertising, so any claims made about a mortgage company’s services must be completely accurate and verifiable. If an influencer partner implies or inaccurately infers promises or endorsements that are misleading, even unintentionally, their lender partner could face severe penalties.
  2. Disclosure Requirements: Influencers must disclose their relationship with the mortgage company in a clear and conspicuous manner. This means that if an influencer is paid, receives commission, or is given discounts, merchandise, or any other goods or services in exchange for their endorsement, this must be clearly communicated to the audience.
  3. Equal Credit Opportunity Act (ECOA): To comply with ECOA, mortgage companies must ensure that their marketing practices do not discriminate on the basis of race, color, religion, national origin, sex, marital status, age, or any other protected status. Influencer campaigns should be designed to reach a wide and diverse audience and cannot imply any form of discrimination whatsoever.

Best Practices for Compliance

Now that we know some of the major rules that regulate a lender’s online presence when it comes to influencer partnerships, what can be done to ensure that said partnerships can be beneficial and fruitful for both sides, and not fraught with compliance concerns and possible legal ramifications?

  • Educate and Monitor Influencers: If mortgage companies choose to enter into a relationship with an industry influencer, they should ensure that they are provided clear guidelines for the legal requirements of advertising mortgage services, including the need for honest reviews and transparent disclosures. While it would generally be best to partner with an influencer who is well versed in the industry, what they say – or don’t say – when advertising a lender’s brand is ultimately the responsibility of the lender. Regular monitoring of influencer content is essential to ensure ongoing compliance.
  • Implement a Compliance Review Process: Before any influencer content goes live, it should be closely reviewed by a compliance officer or legal team familiar with financial advertising regulations. This process should verify the accuracy of claims made about mortgage services and the appropriateness of disclosures. Due diligence is key – don’t assume an influencer, no matter how experienced, is staying within the proper boundaries when it’s *your* reputation on the line.
  • Highlight Diverse and Inclusive Marketing: Ensure that influencer partnerships reflect a broad commitment to diversity and inclusion. It is perfectly acceptable to partner with influencers who may resonate with various demographic groups, but avoid marketing strategies that could be perceived as exclusionary or discriminatory.
  • Keep Careful Records: Maintain thorough records of all influencer partnerships, including contracts, communications, and posts. Every piece of public content that a lender creates is subject to regulatory scrutiny. All-encompassing documentation efforts can be vital in demonstrating compliance with industry requirements in the event of an audit or investigation.

Mitigating Risks

Now that we’ve covered steps you can take to make sure that influencers you are working with understand the rules, the risks, and the right way to use their appeal to strengthen your brand, here are a few internal mechanisms and strategies you can put in place on the lender side to help make influencer partnerships a winning combination for your company:

  1. Draw Up Clear Contracts: Agreements with influencers should explicitly state the expectations regarding disclosures, content guidelines, and the prohibition of misleading or unsubstantiated claims. They should understand in no uncertain terms how they are expected to fill their end of the partnership and what their compensation will involve. Contracts should also outline the mortgage company’s right to review and approve all content before publication.
  2. Provide Training and Resources: While we’ve discussed sharing resources with influencers to help them understand their obligations under the law, this also extends to a lender’s internal compliance team. As stated above, utilizing influencers is a form of financial advertising and lender staff must understand that the same strict financial regulations apply. While the majority of advertising content may be generally done in-house, influencer partnerships can be somewhat riskier, insomuch as a non-employee is essentially speaking for – and is a public face of – the company. Extreme care must be taken to prevent influencer content that may be misleading from seeing the light of day.
  3. Be Ready with an Emergency Response: Even with several layers of security involved, it is possible that an influencer partner may say the wrong thing or inadvertently share misinformation. Be prepared to respond quickly to potential compliance issues, once identified in influencer content. This may involve requesting emergency modifications to posted content or, in some cases, terminating partnerships with influencers who fail to meet compliance standards.
  4. Stay Up to Date on Regulations: The mortgage landscape is always evolving. And with technology advancing at a seemingly ever-increasing rate, the industry must continue to evolve to meet new challenges and breakthroughs. Stay informed about changes in advertising, consumer protection, and financial services regulations that could impact influencer marketing strategies. This will most likely require ongoing education for marketing and compliance teams.

Utilizing social media influencers can be a powerful strategy for mortgage companies looking to expand their reach and connect with potential customers in a relatable way. But this strategy comes with potential pitfalls that can drop an unwary lender in legal hot water. By prioritizing compliance and ethical marketing practices, prepared mortgage companies can safely navigate the complexities of influencer partnerships while reaching previously unreachable consumers and upholding their reputation and integrity.