CFPB Director Urges State AGs to Protect Consumers in New Digital Advertising Environment

Following the issuance of a CFPB interpretive rule that digital marketing service providers are subject to consumer protection regulations (see previous coverage), CFPB Director Rohit Chopra warned that "[m]ore and more Americans are experiencing the feeling of being digitally stalked by specific ad content."

In remarks before the 2022 National Association of Attorneys General Presidential Summit, Mr. Chopra said that big tech firms are increasingly interested in how firms can monetize consumer personal financial data. He said that, through new models of advertising technology, big tech firms are able to follow consumers across the digital world.

Mr. Chopra described digital advertising strategy as a shift away from "time or space" advertising. He explained that previously companies would purchase "time or space" to create an advertisement, such as in a newspaper or on a billboard. He contrasted this with digital advertisements. Today, he said, companies utilize psychographic profiles to tailor ads to specific individuals, meaning that, on the same product, two consumers could receive two different ads. Mr. Chopra also argued that "[s]ocial media platforms and other networks are not in the business of simply displaying ads by others, rather they increasingly play an active role in corporate marketing and product development." Mr. Chopra referenced former Secretary of Housing and Urban Development Ben Carson's Complaint against Meta, which alleged that the company "helped advertisers limit the audience for ads and enabled advertisers to target specific groups of people to the exclusion of protected classes[,]" as an example of how current marketing regulations are insufficient to address the rise in technology-based advertising. Mr. Carson's Complaint ultimately led to a settlement between the DOJ and Meta.

Mr. Chopra asserted that "relationship banking is under threat . . . in part because our sensitive data is viewed as more valuable to firms than our actual selves." He described steps that the CFPB is taking to protect "sensitive financial data and [not] to allow tech giants to evade existing laws that other firms must comply with." He concluded that the policing of misconduct by financial and technology firms must change with advances in technology, and that the CFPB seeks to help State Attorneys General "tackle the new challenges in the digital world" by fully supporting state enforcement of the Consumer Financial Protection Act.