You have an idea for a fintech app. As you’re swamped to get it completed, you’re not thinking about the marketing tactics as you get ready to launch into the real world.
But it’s our experience that most fintech entrepreneurs underestimate how complicated financial services marketing regulations are and how serious the consequences of marketing compliance failure can be. That’s why Productfy has deeply considered a set of marketing guidelines and rules as part of our Compliance-as-a-Service (CaaS) offering. This is critical to launching your app with less friction.
But we’re getting ahead of ourselves. Why is marketing something that you need to think of as you create your app? Doesn’t that come later? Or why do I even need to be compliant with financial regulations in my marketing deliverables?
Wake up to the world of regulation
Banking is one of the most heavily regulated industries in the world. The array of acronyms you’ll have to get familiar with is dizzying. ACH, AML, BSA, KBA, KYC, IAV, NPI, PCI, PEP TISA – it’s a veritable fintech alphabet soup.
In banking, marketing falls under the purview of financial regulators, and here’s the kicker: just about everything presented (e.g. text, images, audio/videos) to users of your app or on your website can be considered ‘marketing.’ And your app must be in compliance with both your bank partner and the banking regulators. Failure to meet compliance guidelines can delay the launch of your app for months – or if you somehow get it into the market, leave you exposed to severe penalties from government agencies. Regulatory problems always flow downhill. And if the bank has a problem, you’ll have a problem.
This is why it’s important to be aware of the marketing rules and required disclosures as you’re building the app – because it’s a lot easier, a lot faster, and a lot less expensive to be compliant upfront rather than go back after the fact and try to correct marketing and advertising mistakes.
Trouble is waiting
TISA (Truth In Savings Act), part of Regulation DD, is designed to provide consumer protections by requiring mandatory disclosures in marketing materials. More than just the required disclosures, however, TISA regulates exactly what you can and can’t say about your financial product. Trigger terms such as “free”, rates, time periods, fees – there’s a long list of words that can get you into hot water.
And remember, anything on your website can be considered marketing:
- Welcome banner
- The login page on your app
- Email notification
- Text notice
If you talk about your product and mention any keyword, you trigger disclosures.
Introducing UDAAP
UDAAP stands for Unfair, Deceptive, Abusive Advertising Practices. It’s part of the Dodd-Frank Act and is enforced by the Consumer Financial Protection Bureau and sometimes by the Federal Trade Commission. And while the judgment of what is deceptive may be subjective, the punishment can be objectively harsh – including steep fines, civil lawsuits, and even prison time.
Don’t think you can fly under the radar and skirt the edges of regulation.
The administration has signaled plans to ramp up enforcement, and industry experts expect to see billions of dollars in fines. This applies to big banks (Wells Fargo incurred a $1 billion UDAAP penalty) as well as smaller Fintechs (recently, non-bank GreenSky was hit this year with a $2.5 million civil fine and ordered to refund $9 million in loans.)
Fintechs do not exist in a vacuum. You will be seen.
There’s a solution built just for this case
Productfy’s mission is to empower innovative companies to launch a financial product in the fastest time with the most competitive price. Sure, you could try and hire your own compliance staff – but it’s a fact that knowledgeable, experienced compliance people are hard to find. And very expensive when you do.
Productfy Compliance-as-a-Service (CaaS)
Productfy CaaS allows non-financial companies to enter this complex and heavily regulated space by clearing the hurdles that might prevent you from realizing your vision.
With our solution, the interaction with the bank partner is baked in. Productfy employs experienced compliance officers with decades of experience in the field – who will review your app before it goes to the bank.
In fact, we even provide clients with a step-by-step guide written by bank compliance officers to help you through the process and ensure speedy approvals.
Why do I need a marketing guide?
Great question. The short answer is, to help you stay in compliance and stay out of trouble.
Productfy’s Compliance team is led by Lawrence Sandor, General Counsel and Head of Compliance at Productfy. The Compliance team at Productfy brings decades of compliance experience at large banks and regulatory organizations. If you can get your app past our compliance officers, the bank, and the regulators should be easy.
We’ve drafted a Marketing Compliance Guidelines document that includes:
- An outline of the approval process for marketing to help you understand all of the steps
- Practical compliance checklist to guide you as you draft your app
- Complete glossary of compliance terms
- A detailed explanation of the relevant regulations – CAN-SPAM, TCPA, UDAAP, FDIC
- A real-world example of how to determine if you’re in compliance - or on the edge
The goal of the Marketing Compliance Guidelines document is to reduce friction and make it simple – so it’s written in plain language. Follow the rules, and you’ll avoid problems. And anticipating, and avoiding problems at the beginning gets you to the end quicker.
Productfy will get you to market faster
One of the challenges of the evolving Fintech market is the tension that exists between the FinTech and the bank. Fintechs want to move fast, push the edges, and disrupt the market. Banks, by their very nature, are methodical and risk-averse.
With compliance as part of your product from the very beginning, together we’ll find a common ground. By reducing the friction inherent in the Fintech-bank relationship, and doing the hard part upfront, we’ll help you get approvals, get to market faster, and stay viable.
