The FFIEC issued proposed guidance regarding the use of social media by financial institutions and nonbanks. The proposed guidance does not impose any obligations, but instead seeks to make financial institutions and nonbanks aware of the potential risks involved with the use of social media. The proposed guidance defines social media as "a form of interactive online communication in which users can generate and share content through text, images, audio and/or video," which can include sites such as Facebook, Yelp, Flickr and LinkedIn, as well as virtual worlds and social games.
The proposed guidance outlines three categories of risk: (1) compliance and legal risks associated with marketing deposit and lending products, and facilitating the use of payment systems, specifically, as well as more general risks associated with privacy and anti-money laundering programs; (2) reputational risks related to fraud and brand identity and consumer complaints, among other things; and (3) operational risks arising from the use of information technology. The proposed guidance is seeking comments on other forms of or ways financial institutions use social media; other consumer protection laws and regulations potentially implicated by the use of social media; and technological or other impediments that may hinder compliance with the consumer protection legal framework. The comment period ends March 25, 2013.