It has been noted by military historians that victors of great battles in ancient history were often those who were able to solve the logistical nightmares of getting a larger portion of their army to the battlefield than their opponent. There are many instances of two opposing armies coming across each other unexpectedly, with their soldiers strung out across miles of supply lines. Often, the winner came down to which side could hustle the bulk of their force their meeting point the fastest.
The same could essentially be said of advertising. Every salesperson or marketer or loan officer is offering a service or product that someone out there wants or even needs. But how can the servicer reach this prospective customer most effectively? How can the offerer and the offeree find each other?
Perhaps the most useful method by which a mortgage service can find potential clients in today’s interconnected world is ‘targeted’ social media ads. Nearly all of the world’s largest social media platforms allow advertising. After all, nearly all social media networks are free to join, and selling advertising ‘space’ is how these websites make the bulk of their income. In recent years, many social networks - most prominently Facebook - have honed and crafted the marketing options which they offer advertisers by allowing them to select certain demographics that they would prefer their ads be ‘targeted’ towards. However, while industries like movie theaters and supermarkets can specifically cater to different slices of society when marketing particular movies or merchandise without much worry, the mortgage industry walks a very fine line when it comes to alerting only certain demographics of a particular sale or “deal” that they are extending to the community.
In November of 2016, Facebook was sued after a ProPublica report was released, which alleged that the platform’s targeting advertisement feature enabled marketers to illegally discriminate when buying advertising space on the site and was a violation of FHA and the Civil Rights Act of 1968. The lawsuit alleged that, beyond overt discrimination, Facebook’s use of ‘ethnic affinity’ data mining allowed advertisers to surreptitiously target users according to race. Soon after the suit was filed, Facebook announced major changes to their ethnic affinity program and would no longer allow advertisers to use this data when marketing offers related to the housing, employment, or credit industries.
In instances like this, the platform itself is hardly the only liable party when it comes to improperly targeted advertisements. In 2018, the Communication Workers of America sued T-Mobile, Amazon, and Cox Communications after sending a series of ‘help wanted’ employment ads on Facebook only to users between 18 to 38 years old. By excluding site users over the age of 38, the suit alleges that the defendants violated the Age Discrimination in Employment Act of 1967. To make matters worse, bad actors have taken tremendous advantage of these inherent ‘loopholes’ in the burgeoning targeted ad market by using ad filters to target potential victims with scams based on what personal information they can glean from their social media profiles. Consumer complaints regarding online scams skyrocketed in 2021, with an estimated $770 million in losses, triple the estimated $258 million in 2020.
While the above certainly demonstrates that targeted advertising is inherently precarious in the mortgage industry, that’s not to say that this marketing method should be avoided entirely. An educated and attentive loan officer can still take advantage of the targeted advertisement’s huge potential while avoiding a minefield of compliance issues, provided that they take care in doing so. And social media platforms are working towards removing some of the anarchy in the targeting ad market, albeit slowly. In March of 2020, Facebook launched three Special Ad Categories as part of their advertising system: housing, jobs, and credit. Any marketer attempting to place advertisements in any of these three categories will find their targeting choices restricted to fall in line with compliance regulations and discrimination laws. For example, housing advertisements can no longer be sent to a particular zip code, to protect against the possibility of redlining. Ads cannot be targeted to specific genders or ages, and certain previously available ‘detailed’ targeting selections such as educational level and income are no longer available.
The key to remaining in compliance when it comes to targeting ads is the same when considering any public form of marketing materials: fair and equal access for all. Do you have a particular product that you honestly believe will naturally appeal - for whatever reason - to a certain demographic over another? That is perfectly understandable and getting that product into the eyeballs of the appropriate demo is the principal goal of any servicer. But not if this focus is detrimental to another demo in turn. The Fair Housing Act (FHA) and Equal Opportunity Credit Act (ECOA), by definition, prohibit discriminatory lending practices and guarantee equal credit consideration to everyone under the law. To offer a ‘deal’ to one slice of your consumer base and not offer the same, or a similar, deal with the rest, means to fundamentally exclude customers from this promised equal access. By conscientiously targeting ads to ensure that all consumers offered equal slices of the pie - or making use of a social media analytics service such as ActiveComply that can scrub ads and posts of potentially non-compliant language or material - loan officers, brokers, and other mortgagers can be sure that no class, race, gender, or community is ever improperly omitted from any marketing campaign. And then, instead of fretting over the propriety (or impropriety) of every pitch or promotion, you can make the power of targeted advertising work for you.
For many financial institutions, the fear of citation for unlicensed activity, including the...