August 11, 2022

CFPB: Digital Marketing Providers Are Subject to Consumer Protection Regulations

The CFPB issued an interpretive rule clarifying that "digital marketing providers that are materially involved in the development of content strategy would not fall within the "time or space" exception" to the definition of the term "service provider" under the Consumer Financial Protection Act ("CFPA"). As a result, the CFPB affirmed that digital marketing providers for financial firms can be subject to traditional service provider regulations and thus be held liable for engaging in unfair, deceptive or abusive acts or practices.

The interpretive rule states that under the CFPA regulations, a service provider is "any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service." The exception states that "a person is not a service provider solely by virtue of such person offering or providing to a covered person time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media." Digital marketing firms typically contribute material information to content strategy plans by identifying (i) prospective customers or (ii) behavioral tendencies that help target areas to place content to bolster consumer engagement.

The CFPB issued the interpretive rule "to address digital marketing providers that commingle the targeting and delivery of advertisements to consumers, such as by using algorithmic models or other analytics, with the provision of advertising "time or space."

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