Nathan Newman, from an organization called Tech Progress, posted recently on Huffington Post calling for the CFPB to regulate online advertising. I spend a lot of time working on financial services online advertising issues, so this caught my eye (and also because it was highlighted in yesterday’s Consumer Bankers Association’s SmartBrief).
Newman posits that the CFPB should define large online advertising networks and search engines, like Google, to be “Larger Participants,” which would squarely put them under the CFPB’s purview. I do not know how necessary it is to target such companies for the CFPB’s jurisdiction, since the providers of consumer financial services and products who pay for the advertising activities are subject to their jurisdiction anyway. If the folks paying for the advertising activity cannot engage in it, then, these online advertising networks and search engines will stop offering it.
Mr. Newman spends a good amount of time in his post worrying about the lack of oversight for financial services advertisements that are presented on the basis of the consumer’s geo-location information. Again, imposing this concern on online advertising networks and search engines seems misplaced since the financial institutions behind the advertising are responsible to the regulators, including the CFPB, for all aspects of their advertising campaigns. If their use of geo-location advertising presentment services results in redlining or reverse redlining, then, the financial institution is responsible for that result and must change its advertising practices.
Alternatively, there are very good, and benign, reasons that a financial institution might use geo-location advertising presentment services — many banks offer different products in different states, for example, and some state laws forbid certain products to be offered at all. In fact, depending on where things settle on whether state law is preempted, these geo-location advertising presentment services may be crucial to helping banks advertise compliantly.
Additionally, there are arguments to be made, which may be successful or not, regarding whether Google and their ilk could fall into the definition of service provider and be subject to the CFPB’s jurisdiction anyway. For example, to the extent Google or other online advertising networks and search engines merely publish or broadcast advertisements, then they fit into an exception for the definition of service provider under § 1002(26)(B) of Title X of the Dodd-Frank Act. But Google, for example, through its various online advertising programs and services, like this AdWords for Gmail program mentioned in this post from Searchengineland.com, could be viewed as being more than just the publisher, and potentially a service provider, since it actually participates in the development of the online advertising by making suggestions to advertisers about keywords, how to optimize the ad and search descriptions, etc.
So I do not think it is necessary or even desirable to categorize online advertising networks and search engines as “Larger Participants” because financial institutions themselves are clearly subject to the CFPB’s jurisdiction (not to mention the regulation of the states and the prudential banking regulators) and the FTC’s jurisdiction already directly covers online advertising networks and search engines.