What will the Dodd-Frank Act mean for marketing?

• Author: Pry, Carl G.

BY NOW WE'RE ALL AWARE that the nuclear bomb of financial makeovers is finally here. Virtually every aspect of banking is touched in some way by the new legislation (officially known as the "Dodd-Frank Wall Street Reform and Consumer Protection Act").

New regulators and agencies have been or will be formed, and it's been estimated that over 500 new rulemakings will take place and over 5,000 pages of regulations will be issued. We all know that many new restrictions are forthcoming. But what does this mean for your marketing efforts? What should you be aware of as these new rules are put into place?

The Bureau of Consumer Financial Protection

The legislation doesn't directly impact marketing or advertising; that is, there is no new Bank Marketing Police Agency or anything similar being created. But there is a marketing issue as a result Title X of the Act, known as the "Consumer Financial Protection Act of 2010." This title creates the Bureau of Consumer Financial Protection.

Housed within the Federal Reserve (but acting independently), the Bureau is an all-new regulator "which shall regulate the offering and provision of consumer financial products or services." [Sec. 1011] Terminology is always critical in any law or regulation, and here it's the word "provision" that should grab marketers' attention. The Bureau's duty is to ensure that financial products and services are not designed or provided to consumers in an unfair, deceptive or abusive manner. "Provided" includes how products and services are marketed.

We're all reasonably familiar with UDAP (unfair or deceptive acts or practices). It's an existing standard in Section 5 of the FTC Act which, among other things, requires that advertisements not be "unfair or deceptive," and those terms have established meanings. But the new law introduces "abusive" practices into the mix and charges the Bureau with the...