CFPB Says Big Tech Digital Marketers Liable for Unfair, Deceptive Practices

SOURCE: American Banker

The Consumer Financial Protection Bureau said that digital marketing firms that use algorithms or other analytics to target specific customers with ads or content can be held liable for abuses under federal law. 

The CFPB on Wednesday issued an interpretive rule and CFPB Director Rohit Chopra gave a speech to the National Association of Attorneys General in which he urged state officials to lead the charge to police unlawful conduct by Big Tech firms.

Digital marketers can no longer claim an exemption from the Consumer Financial Protection Act, and are liable under the interpretive rule for "unfair, deceptive or abusive acts or practices," known as UDAAP violations, Chopra said. 

Digital marketers often are involved in the development of content strategy when they identify or select prospective customers and do not merely provide ad time and space that in the past would have qualified for an exception to the law, Chopra said. 

"Today, the CFPB has issued an interpretive rule explaining that the service provider exemption for "time or space" will typically not apply to the digital marketing services offered by major platforms," Chopra said at the attorneys general summit in Des Moines, Iowa. "While they may be providing space for ads, these firms are commingling many other features that go well beyond the exemption."

Claims for misconduct by digital marketers that act as service providers can be pursued by state attorneys general for consumer protection violations, he added. 

The interpretive rule is just the latest in a string of changes to hold nonbank financial and technology firms accountable by bringing them under the CFPB's authority.