On August 10, 2022, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) announced that digital marketers who provide customer targeting and ad serving services to consumer financial services companies are subject to the Consumer Financial Protection Act. issued a rule of interpretation clarifying the position. (“CFPA”) as a “Service Provider”. Importantly, the rule positions technology companies that provide such marketing services as falling within the Department’s Unfair, Deceptive, and Abusive Acts or Practices (“UDAAP”) enforcement powers. I am taking The Interpretive Rule is exempt from the notice and comment rulemaking process under the Administrative Procedure Act, but it is also not enforceable.

Overview of Interpretation Rules

The CFPA, including the UDAAP’s prohibitions, apply to “Covered Persons” who offer or provide consumer financial products or services. The CFPA also applies to service providers to Covered Persons. The CFPA defines a “service provider” as “any person who provides a material service to a Covered Person in connection with or in connection with the Covered Person’s provision or provision of consumer financial products or services.” provided, however, that “Service Providers” do not provide “support services or similar services of the kind generally provided to businesses” or “time or space for the advertisement of consumer financial products or services through printed matter, newspapers”; No stuff included. , or electronic media. The interpretation rules address the application of these exceptions to digital his marketers.

The rule states that when digital marketers identify or select prospective customers and/or select or place content that influences consumer engagement, they do not provide critical and therefore “critical” services to the target audience. says there is. The rule provides that such “essential” services fall outside the scope of the CFPA’s “service” exception. The rule also explains that companies that provide such services do not fall under the “time or space” exception because they provide more than “airtime or physical space” for advertising. doing. The Interpretive Rule states that digital marketers will become increasingly involved in developing their content strategy and are increasingly likely to become service providers under the CFPA.

This rule provides a number of examples to illustrate the difference between “critical” services and those that qualify as exceptions. For example, if a digital marketer gives you the ability to choose to have your advertisements displayed on a particular web page or application of your choosing, any user of that page or application may not see your advertisements. , the rule falls under the “time or space” exception for such activities. However, if a digital marketer targets and serves ads to certain users based on certain characteristics, even if those characteristics were specified by the target audience, the rule would be that it would be a “substantial” service. said it is likely. Where digital marketers themselves identify or suggest an appropriate audience for a particular advertisement (e.g., based on the marketer’s knowledge of user characteristics and behavior), the rules of interpretation would preclude this from being airtime or physical offerings “much more It is said that it is something that exceeds. Spaces and marketers are usually considered service her providers in this situation.

UDAAP considerations

As noted above, one of the most important aspects of the rule is its position that technology companies that provide these types of marketing services fall within the Bureau’s UDAAP supervisory and enforcement powers. . Earlier this year, the CFPB issued an opinion that discriminatory practices in the provision or provision of consumer financial products or services may constitute unfair practices for purposes of the UDAAP prohibition. The Secretariat has also expressed concern about algorithmic bias and the so-called “digital redline”. Taken together, these developments target what the CFPB sees as potential discrimination arising from technology companies relying on UDAAP authority to target advertising to consumers using consumer data and algorithms. This suggests that they may be planning to

What about Section 230?

In particular, this interpretation rule leaves open how the CFPB intends to implement this new view of “service provider.” For example, will the CFPB seek to use its UDAAP powers (both oversight and enforcement) against platforms that publish targeted advertisements created by others? It does not describe the agency’s position on how the agency might influence these efforts. The statue states that “no provider or user of interactive computer services shall be treated as a publisher or speaker of information provided by another information content provider” and that the has been construed in many courts to prohibit litigation against digital platforms. by a third party.

Conclusion

This interpretation rule should be seen as another signal to technology companies that bureaus are taking great care in their use of consumer data and algorithms. This caution will result in increased enforcement activity by the CFPB and possibly by state regulators. In announcing the rule, Secretary Chopra said: [f]Federal and state law enforcement agencies can and should be held accountable if these companies break the law. Department Support for National Enforcement of CFPA.

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