In just a few short years, social media has forever changed how many industries do business and the mortgage industry is no exception. Facebook, Twitter, Vimeo, and many other social networks allow for an ever-flowing stream of ideas, opinions, and marketing to circle the globe. While social media can appear to be limitless in its potential to loan officers and other sales staff searching for new customers, it can also pose severe risks for lenders if their employees use it to circumvent industry regulations, even if this takes the form of a seemingly innocent blog or Facebook post among friends or family. Today’s open market of posts and threads unavoidably creates a challenging landscape for employers as they strive to balance the opportunities inherent in social media with its dangers, including the reveal of trade secrets, potential for regulatory violations, and negative impacts to a brands image. This constant effort to adapt has recently borne fruit in the form of proactive changes that some lenders are making to their employment agreements.
One of the most crucial early acknowledgements of the relationship between employer and employee is that of the employment agreement. Historically, the employment agreement, or contract, consists of several basic tenets that both sides have settled upon prior to employment becoming official: salary, benefits, the employee’s typical work schedule, vacation allotment, and so on. Depending on the industry and/or the employee’s work function, a non-disclosure agreement (or NDA) may also be involved. An NDA is a legal contract which posits that the employee will be privy to certain ‘trade secrets’ during his or her employment and may not divulge these secrets to anyone under threat of prosecution.
This promise of non-disclosure now has a new wrinkle in the form of social media. Where before an employee only needed to ensure they didn’t let information slip during get-togethers, phone calls, or letters to family (to name a few), employers must now contend with multiple online avenues where an employee’s seemingly innocuous Facebook post might contain secret information vital to the company. That is why many companies are not only lumping specific social media language into their NDAs but also in general employment agreements as well.
In 2013, the Federal Financial Institutions Examination Council (FFIEC) published a social media guidance press release on behalf of the prudential financial regulators to address the burgeoning widespread use of social media. While not official requirements, the release was meant as a guide to the industry as to the expectations associated with social media usage, especially when related to numerous laws and regulations specific to the lending industry, including UDAAP, Regulation N, Regulation Z, and the S.A.F.E. Mortgage Licensing Act.
With this guidance in mind, lenders have molded their social media policies to include items like: what social media sites can and can’t be used under company branding, specific company policies around consumer privacy, and outlawed advertising practices by state. Many individual lenders have taken steps in subsequent years to institute social media compliance officers or departments, whose main function is to conduct risk assessments on employees’ social media accounts to determine if said employee’s social media presence has caused the company reputational damage and/or compliance violations. This, however, can be a daunting and time consuming task for employees, so lenders have begun to also employ automated social media monitoring tools to facilitate the process. This method has become more and more popular as social media continues to extend its reach, allowing lenders to ensure that employee social media content does not result in any regulatory citations or damage to the brand image.
Widespread social media usage is barely a decade old and the mortgage industry has been at the forefront of this technological curve, constantly analyzing how its instant communication via a multitude of platforms affects and endangers regulatory compliance. By folding social media policy into employee agreements and/or NDAs, creating a social media policy guide, or employing a social media officer or department with automated tools, lenders can better strengthen their dedication to compliance while allowing their sales force to utilize this ever growing resource called social media.
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