Pub. 8 2013-2013 Issue 5

January | February 2014 21 Extraordinary Service for Extraordinary Members. A lthough social media is a relatively young force within U.S. culture, it has transformed the way busi- nesses operate. As a result, no company can afford to neglect social media when it comes to conducting business, especially in advertising andmarketing efforts. Even though banks are often conservative, and are perhaps slower to jump on cultural bandwagons than some other industries, the time for holding back from this particular trend is now over. Most companies have a website; most employees, especially management, are likely to use smart phones and tablets and will usually have accounts on major social media websites such as LinkedIn, Twitter, and Facebook. In short, you really do need to have policies and procedures ready to provide much-needed guidance about social media usage for management and staff. The first step is studying what the experts have to say on the subject. Several guidelines are available: • The Federal Financial Institutions Examination Council (FFIEC) recently (Dec. 11, 2013) published a Financial In- stitution Letter, “Consumer Compliance RiskManagement Guidance,” on the use of social media by banks, savings institutions, and credit unions. • The Financial Industry Regulatory Authority (FINRA) pub- lished Regulatory Notice 10-06 in January 2010. • The Federal Trade Commission (FTC) published “Guides Concerning the Use of Endorsements and Testimonials in Advertising” in October 2009. All three of these documents are relatively short and may well be worth your time to read. The FFIEC document and FTC document are both 12 pages for example, and the FINRA document is 10 pages (with the last bit of text appearing on page 9). The following sections provide a brief summary of the main points. FFIEC The FFIEC document has the following purposes: • Helping you to understand and manage the risks of social media. • Educating you about your responsibilities under current requirements. Specifically, FFIEC has made it plain that The New Social Media Guidelines Sophie B. Hanson , the newsLINK Group, LLC consumer protection laws and compliance laws and regula- tions apply to activities conducted through social media for financial institutions. • Reminding you that you have a responsibility to address the risks associated with activity on social media. The FFIEC document does not contain any new require- ments to be followed. It is organized as follows: • Purpose: Industry participants asked for this guidance because they wanted to know what the members of the FFIECwould suggest for creating appropriate riskmanage- ment programs. Final responsibility lies with U.S. financial institutions, not with the members of the FFIEC, but this document contains the current advice and recommenda- tions from the FFIEC and has been adopted by its member agencies. • Background: This section provides a summary of current social media and ways in which financial institutions might make use of it. • Risk management programs: All financial institutions can benefit from having a risk management program. The size and complexity of that program depend on the financial institution’s involvement; logically enough, a regional bank with little or no social media involvement does not need as big a program as a bank that has developed a heavy reli- ance on social media. The section about risk management programs outlines programbasics such as governance struc- ture, policies and procedures, employee training, oversight, and audits. • Risk areas: This is by far the longest section of the report and is essentially a laundry list to help financial institu- tions assess what their own risks might be. It contains 33 footnotes and a short conclusion (the conclusion being that if you assess the risks and implement a program to reduce them, your financial institution will benefit from that). One of the risk areas listed in the FFIEC document is about employees who use social media websites, but it only consists of a single paragraph. The FINRA and FTC documents both deal with this subject in more detail. The FINRA document addresses employees’ business use of social media, not their personal use. The FTC document fills in some of that gap. Why You Need Social Media Policies and Procedures  Social Media — continued on page 30