You may be wondering about the compliance aspect of marketing. Simply put, compliant marketing ensures that your company’s marketing and advertising content complies with the laws and regulations that govern how organizations are allowed to market their products and services.
Many of these regulations come from federal agencies like the Consumer Financial Protection Bureau (CFPB), The Federal Trade Commission (FTC) and The Federal Communications Commission (FCC) that have a mission to protect consumers from companies that may — intentionally or unintentionally — deceive or mislead consumers.
Compliance of marketing continues to be a hot-button issue across a wide range of industries, especially in consumer finance circles. Federal regulators, including heavy hitters like the CFPB and the Department of Justice (DOJ) have continued to enforce zero tolerance policies for misleading or deceptive marketing practices towards consumers. In 2015 alone, CPFB cases yielded $6 billion in consumer relief as compensation for damages, and $1 billion in restitution as unlawfully obtained gains were forfeited and returned to consumers. Last November, the DOJ appointed a dedicated compliance counsel expert in the Fraud Section who will assist prosecutors in measuring the effectiveness of corporate compliance programs and determining resulting regulatory fines and criminal liability. This means that not only are company reputations on the line, but individual executives who make missteps can be prosecuted.
The good news is that a new year means a fresh start. That is why now is the time to take a hard look at your company’s marketing practices to ensure that they hold up to increasingly stringent federal marketing and advertising guidelines. To preserve the health and reputation of your company and minimize your risk profile, here are five things you really need to know about marketing compliance:
Federal scrutiny shows no sign of waning. With the DOJ as the most recent federal agency to make corporate compliance a top priority, companies should expect the DOJ, CFPB, FCC, and FTC to continue imposing harsh penalties on those companies and/or individuals who engage in deceptive marketing practices, knowingly or unknowingly. Last year alone, the CFPB made 49 enforcements and the FTC issued 47 settlement orders. The pressure is on –companies need to realize that the days of “warnings” or “a slap on the wrist” are long gone.
Consumer complaints count. Pay close attention to incoming complaints from your customers. Typically, these complaints tip off federal watchdogs, which can lead to serious penalties. At PerformLine, we took a closer look at complaint trends to put the risks associated with consumer complaints into perspective for companies. Based on our analysis of the CFPB Consumer Complaint Database, we found that when consumer complaints to the CFPB reach above 2,000 for a company, there is a 58% chance that company will be fined. Average fines range from $134 million (for companies that received 2,000 to 10,000 complaints) to $758 million (for companies with more than 10,000 complaints). This should be a wakeup call to any company that doesn’t take their consumer complaints seriously. You can also learn a lot about “what not to do” by reviewing the database to see complaints being made about other companies in your space and in other industries.
Compliance monitoring is an absolute must. With noncompliance leading to billions in corporate losses, companies that make an upfront investment in compliance monitoring, according to Forrester, are helping to safeguard their reputations from permanent harm. Companies should implement a comprehensive compliance management system (CMS) to keep track of how marketing messages are delivered across channels, including digital, television, print, radio, and contact centers. But, not all monitoring plans are created equal. The most effective plans combine audit capabilities–a standard operating procedure for violation remediation–and technology that flags potential violations with enough time for companies to make modifications and document their actions. Without comprehensive monitoring in place, it is virtually impossible for companies to stay on top of their communications and limit their risk profile.
Delineate compliance roles. Don’t make the mistake of putting sales and marketing teams in charge of marketing compliance duties. Dedicated compliance teams are needed to allow for objective monitoring of marketing activities. Many companies have opted to appoint a chief compliance officer in place to oversee all compliance activities and report to the CEO or board of directors. According to a 2014 Compliance Trends Survey conducted by Deloitte and Compliance Week, 50 percent of the senior-level corporate compliance professionals surveyed now have a stand-alone chief compliance officer in their companies, up from 37 percent the previous year. With dedicated compliance officers in place, companies can better minimize the likelihood of making costly mistakes.
Knowledge is power. Educating yourself about the marketing compliance landscape and the shifting regulatory environment is a relatively easy process to adopt. As such, it is important to track changes in compliance regulations and guidelines– these are regularly issued via press releases and news bulletins (e.g., the CFPB newsroom and FTC press releases). Traditional and social media coverage of compliance violations and enforcements can also provide valuable insights for your company. Finally, look to attend webinars and conferences that are examining compliance issues (e.g., COMPLY). Staying on top of the latest news can help you ensure that your compliance practices are as current as possible.
Taking control of your marketing compliance practices is no longer optional. With mounting federal regulatory scrutiny and steeper penalties for regulatory infringements, companies need to make a healthy investment in compliance. Trying to downplay the role of compliance is simply not worth the risk.
Founder and CEO, PerformLine, Inc.
Alex is a seasoned executive and a recognized leader in the compliance and digital media industries. Alex founded PerformLine as he saw the growing need for compliance and verification in the marketing space. Using his deep experience in media and lead generation he developed the PerformMatch™ SaaS platform to help companies discover, monitor and enforce regulatory and brand compliance.