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Audit Risk: Review Sites and the Consumer Financial Protection Bureau

Financial institutions have a new reason to pay serious attention to online rating and review sites, according to a small article with big impact in the Monday, November 7th edition of Wall Street Journal.*

According to WSJ:  “The [audit] manual also encourages its auditors to consider complains lodged not only with the [Consumer Financial Protection] Bureau, but with such political actors as state attorney Generals and “on-line consumer complaint boards such as http://www.ripoffreport.com and http://www.complaints.com.” [Emphasis added.]

The Consumer Financial Protection Bureau (CFPB) was created with regulatory authority that far exceeds current financial industry regulations.  Banks have long endured regulatory audits for possible “unfair” or “deceptive” practices when conducting business with consumers. However, the CFPB has the newly expanded authority, granted by the 2010 Dodd-Frank Law, to look for “abusive” acts.

The first concern for banks is that the definition of “abusive” remains unclear.  The second and larger concern for banks is the CFPB can source online rating and review sites for evidence of possible abusive acts.  The article mentions two review sites as examples: RipOffReport.com and Complaints.com.  Engage121 monitors these two among the top forty consumer rating and review sites.  

Evidence of this expanded authority was first published (buried) in mid-October in an 802 page tome called “Supervision and Examination Manual – Version 1.0”.

Last Wednesday, the brawn of CFPB’s expanded authority came to light when the new head of the Bureau, Mr. Raj Date, addressed Congress.  Mr. Date described how the CFPB is empowered to “focus on the consumer” when regulating the nation’s financial institutions.

Engage121 is a social media management application that monitors all the consumer review sites that impact financial institutions, plus twenty social platforms and blog publishing tools, all in one integrated interface.  The Engage121 application allows our financial clients—ranging from large insurance and financial planning companies to regional and community banks—to engage consumers while maintaining compliance with regulatory institutions including FINRA and the SEC.

For more information or guidance on monitoring social media platforms and review sites for financial institutions, please contact Jack Serpa, executive vice president of Engage121, at 203-849-7246, jserpa@engage121.com, or @jackserpa.

* The WSJ article: http://online.wsj.com/article/SB10001424052970203716204577013804002477724.html?

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