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In a recent interpretive rule announced on August 10, 2022,-and
unveiled at a summit of the National Association of Attorneys
General-the CFPB stated that digital marketers are subject to the
CFPB’s jurisdiction, and expressly warned that it may take
enforcement action against these entities. Such enforcement is
likely to concern anti-discrimination provisions, and the new rule
notes that State Attorneys General have jurisdiction to enforce
these rules as well.

Prior to the CFPB’s August 10 rule, digital
marketers-companies that market to consumers through social media,
websites, and other online and digital channels-may have considered
themselves outside the reach of the Consumer Financial Protection
Act of 2010 (CFPA), which provides that an entity is not a covered
“service provider” if it provides “time or
space” for an advertisement for a consumer financial product
or service through print, television, or electronic media.

In its new interpretive rule, however, the CFPB announced that
it believes digital marketers are not exempt if they are
“materially involved” in the development of a
“content strategy” for the marketing of financial
products, and thus are covered service providers under the CFPA.
The CFPB noted the evolution of modern digital ad targeting,
describing how instead of just providing a forum for an ad, digital
marketers are increasingly involved in the selection of prospective
customers or the placement of content to affect consumer behavior,
often based on the gathering of consumer data. Whereas the former
practices would not be covered, the CFPB contends that the latter
are more similar to conduct that would typically be performed by
persons covered by the CFPA. The rule singled out practices such as
lead generation, customer acquisition, and other marketing analysis
or strategy using data and technology, as amounting to
“material” involvement and thus covered behavior.

The new rule is a signal that the CFPB will be increasing
enforcement in this area. In its accompanying press release, it
described the new rule as a “warning” to digital
marketing providers, and CFPB Director Rohit Chopra stated,
“When Big Tech firms use sophisticated behavioral targeting
techniques to market financial products, they must adhere to
federal consumer protection laws. . . . Federal and state law
enforcers can and should hold these firms accountable if they break
the law.” In his remarks at the rule’s unveiling, Chopra
also encouraged state attorneys general to pursue claims under the
Consumer Financial Protection Act for any misconduct involving
consumer financial products or services, including as to digital
marketers.

The rule’s reference to “state law enforcers” is
notable. The rule was first unveiled by Director Chopra during a
summit of the National Association of Attorneys General, on
consumer protection in the digital world. In his prepared remarks,
Chopra emphasized the “role of state enforcers in policing
unlawful conduct at the intersection of consumer finance and
digital marketing.” The interpretive rule notes state AG
jurisdiction, and the CFPB has stated previously that state
enforcement authorities also have jurisdiction to enforce the
CFPA.

Substantively, a stated purpose of this effort by the CFPB is to
address discrimination, which the CFPB has raised as a concern with
regard to AI and machine learning. The new rule warns that the
UDAAP provision (unfair, deceptive and abusive acts/practices) will
be used to combat the use of protected characteristics to make
marketing decisions (i.e. digital redlining).

The CFPB has taken other actions directed towards discrimination
more broadly. It recently updated its Examination Manual to include
discrimination as a part of UDAAP, and the agency is currently litigating the reach of ECOA (Equal Credit
Opportunity Act) to digital marketing. In July 2019, we publicly highlighted the use of UDAAP and similar
authority as a basis for enforcement actions alleging
discrimination in the use of digital tools.

Companies involved in digital marketing should review the new
interpretive guidance carefully, re-review their practices to
consider whether they may be potentially subject to enforcement
action at the state or federal level, and be on the lookout for any
potential challenges to the new rule.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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