Skip to content

Menu

LexBlog, Inc. logo
NetworkSub-MenuBrowse by SubjectBrowse by PublisherBrowse by ChannelAbout the NetworkJoin the NetworkProductsSub-MenuProducts OverviewBlog ProBlog PlusBlog PremierMicrositeSyndication PortalsAbout UsContactSubscribeSupport
Book a Demo
Search
Close

CFPB’s New Interpretive Rule Sets Sights on Digital Marketing Vendors

By Moorari Shah, A.J. Dhaliwal & Gabriel Khoury on August 29, 2022
Email this postTweet this postLike this postShare this post on LinkedIn
Advertising Image - Digital Ads

On August 10, the CFPB issued an interpretive rule stating that digital marketing providers that are involved in the identification or selection of prospective customers or the selection or placement of content to affect consumer engagement including purchase or adoption behavior, are subject to the CFPB’s jurisdiction. The rule ostensibly clarifies the scope of companies that are “service providers” under the Consumer Financial Protection Act (“CFPA”) to include digital marketing providers, and thereby subjecting them to the CFPB’s authority to prohibit unfair, deceptive, abusive acts or practices (UDAAPs). 

The CFPB’s jurisdiction applies generally to a “covered person,” which is “any person that engages in offering or providing a consumer financial product or service.” The Bureau’s jurisdiction also extends to “service providers” that provides a “material service” to a covered person in connection with the offering a consumer financial product or service. However, the term “service provider” does not include those providing either (i) “a support service of a type provided to businesses generally or a similar ministerial service” or (ii) “time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media.” 

The interpretive rule states that digital marketing providers are service providers to the extent they are involved in the development of content strategy, identify or select prospective customers or select or place content in order to encourage consumer engagement with advertising. The CFPB also stated that digital marketers engaged in this type of ad targeting and delivery are not merely providing ad space and time, and they do not qualify under the “time or space” exception. 

The rule also explains that “states, and other consumer protection enforcers can sue digital marketers” that may be liable for UDAAPs. In a related statement, CFPB Director Rohit Chopra stated that “[w]hen Big Tech firms use sophisticated behavioral targeting techniques to market financial products, they must adhere to federal consumer financial protection laws. 

Putting It Into Practice: The rule is critical for third-party purveyors of data, including numerous marketing strategy companies that will find themselves subject to potential scrutiny, particularly if the CFPB views the data as a conduit for discrimination, which the CFPB recently deemed to be a UDAAP (see our previous blog post here). In addition, the CFPB has routinely held service providers accountable for knowingly or recklessly providing “substantial assistance” to companies that violate consumer financial services laws. Such substantial assistance is deemed to be in violation of the law to the same extent as the person to whom such assistance is provided. Within the context of digital marketing providers, the use of the substantial assistance enforcement mechanism may re-emerge as a common way for the CFPB to go after parties that might not otherwise appear to have engaged directly in any illegal activity. 

Photo of Moorari Shah Moorari Shah

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm’s Los Angeles and San Francisco offices.

Read more about Moorari ShahEmail
Photo of A.J. Dhaliwal A.J. Dhaliwal

A.J. is a partner in the Finance and Bankruptcy Practice Group in the firm’s Washington, D.C. office.

Read more about A.J. DhaliwalEmail
Photo of Gabriel Khoury Gabriel Khoury

Gabriel Khoury is an associate in the Corporate Group in the firm’s Washington, D.C. office. He is the Lead Associate of the Blockchain and Digital Assets Team.

Read more about Gabriel KhouryEmail
  • Posted in:
    Corporate & Commercial
  • Blog:
    Retail Trend Spotter
  • Organization:
    Sheppard, Mullin, Richter & Hampton LLP
  • Article: View Original Source

LexBlog, Inc. logo
Facebook LinkedIn Twitter RSS
Real Lawyers
99 Park Row
  • About LexBlog
  • Careers
  • Press
  • Contact LexBlog
  • Privacy Policy
  • Editorial Policy
  • Disclaimer
  • Terms of Service
  • RSS Terms of Service
  • Products
  • Blog Pro
  • Blog Plus
  • Blog Premier
  • Microsite
  • Syndication Portals
  • LexBlog Community
  • Resource Center
  • 1-800-913-0988
  • Submit a Request
  • Support Center
  • System Status
  • Resource Center
  • Blogging 101

New to the Network

  • Tennessee Insurance Litigation Blog
  • Claims & Sustains
  • New Jersey Restraining Order Lawyers
  • New Jersey Gun Lawyers
  • Blog of Reason
Copyright © 2025, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo