Compliance Crack Down on Social Media Coming?
When it comes to social media, financial marketers are often caught between “content” and “compliance.” For instance, how do you promote a financial product or service within the constraints of a 140-character tweet while still adhering to regulatory requirements?
In July, the U.S. Food & Drug Administration cracked down on pharma giant Novartis for using online tools like Facebook Share and the popular social media widget ShareThis. The FDA said Novartis failed to meet regulatory and compliance standards when the company asked consumers to tell their friends and family about Tasigna, a cancer drug.
Facebook Share is a way for people to share articles, web pages and other content with their Facebook friends. With two clicks, someone can send a link along with a thumbnail image and a brief description to potentially hundreds — even thousands — of other Facebook users. Similarly, ShareThis allows people to quickly and easily share web content with users of popular social media services like Twitter and Digg.
Omission of Risk
The FDA is taking a tough stance, calling the drug manufacturer’s marketing incomplete and misleading. The agency, concerned people might tweet something like, “This drug saved my mom’s life with no side effects,” fired off a stern letter to Novartis.
“Shared content is misleading because it…fails to communicate any risk information associated with the use of [Tasigna],” the letter stated.
“Widgets that allow users to share content via other social media applications offered via the ‘Share This’ tool…raise similar issues,” argued the FDA in its letter.
How will the FDIC and NCUA respond?
The repercussions of the FDA’s crackdown on Novartis could ripple throughout regulated industries, impacting everyone from banks and credit unions to insurance companies and investment firms — maybe even manufacturers of packaged foods. While regulatory agencies often seem to be lagging as much as a decade behind the markets they oversee, they eventually catch up. Even though this is likely the first time the FDA has issued a warning to a pharmaceutical company over its use of Facebook, don’t be surprised when someday soon, you see the FDIC and NCUA launching their ‘Social Media Taskforces’ or ‘Online Compliance Divisions.’
Considering how many financial institutions run video contests and “tweet this” sweepstakes, it’s inevitable that a bank or credit union somewhere will encourage consumers to extol the virtues of a specific product…while somehow failing to meet compliance regulations.
Key Takeaway: Even though social media tools provide limited space for communicating with consumers, financial marketers are responsible for making sure all necessary disclosures are properly integrated into their social media marketing initiatives.
This article © 2012 by The Financial Brand and may not be reproduced.
Related Articles From The Financial Brand:
- Survey Reveals Mix of Feelings, Approaches Towards Social Media in Banking
- Reality Check 2.0: Social Media Myths & Facts
- Credit Union Launches ‘Check In for Charity’ Social Media Drive
- Financial Firm Green Lights Social Media For All 1,000 Employees
Similar to this is a recent suit filed against Facebook. Two teens are claiming the social networking site sold their names and images to advertisers without parental permission. This was done through Facebook’s “Like” feature that allows members to note that they like an advertised service or product. This violates a California law that requires parental consent for children to make commercial endorsements. Not sure if there’s a case here or not, but we’re following it pretty closely.
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I think it’s near-impossible to not see this coming.
I’ve observed dozens of “don’t forget to opt-in for overdraft protection!” tweets in the last few months, all in violation of TISA.
Shame, shame…
The crackdown is definitely coming! I think that a lot of companies are sensing that as well. I get calls everyday from companies about this subject and they are starting to get uncomfortable about all the social networking that is going on without any compliance oversight.
I think we are beyond the days of banning social networking because of compliance concerns however. Marketing departments have learned what social media can offer and they are hooked! There’s no going back in their eyes.
james
Great article. There are some items that should induce pause from all individuals actively utilizing social media networks both personally and professionally. I find it somewhat difficult to understand how the FDA could hold an organization liable for content communicated by non-employees that is not sanctioned by the organization.
The example used in the article (The agency, concerned people might tweet something like, “This drug saved my mom’s life with no side effects”) depicts a very slippery slope in terms of regulatory issues, enforcement and potential penalties for organizations and individuals alike. Not only would regulations forbidding individuals from posting/sharing such information infringe on their freedom of speech, they would have no way to enforce it. It begs the question; if I tweeted, “You should opt-in for overdraft protection @financialinstitution, it will save you money!” how would the organization have any control over that? And, how could regulation stop me from expressing my personal experience using the service (as a consumer, would I really need to provide regulatory jargon…)?
I believe oversight is upon us, however, the justification the FDA has utilized in the letter is not practical reasoning nor enforceable. Maybe I am just being difficult or missing the point the FDA is trying to make completely, but who are they to dictate that the potential message an uninformed, non associated individual is the responsibility of the organization/manufacturer?
Just my two cents…
Thanks again for the great read and comments!
Good points Matthew. You’re right, it is indeed a slippery slope that leads to weird 2nd Amendment issues. I think the FDA’s primary concern is the sharing tools deployed by Novartis. The company is actively asking consumers to market on behalf of the company. I would certainly hope that regulatory bodies ignore what people choose to share voluntarily. There should be no curbs or restrictions placed on the consumer’s right to say what they want, when they want and to whom they want.
Measures to ensure compliance? Employee compliance fine, but once it gets into the online space and information starts moving around, there is no control over what is shared and said. I am in agreement here with Matthew, it’s very difficult to put restrictions on a consumer.