Creative, attention-grabbing marketing is an art mastered by many fintech companies. However, federal financial and consumer protection regulators are ramping up scrutiny of marketing materials related to financial services, such as banking products, brokerage, or investment advice. Different regulatory frameworks may apply to different services, and fintech companies looking to expand across various types of services should proceed with caution in their advertisements and public-facing materials.
There are a growing number of pitfalls for the unwary, and the stakes can be high. Even apart from any direct supervision or immediate threat of action by a regulator, fintech companies may find that problematic marketing practices can create roadblocks for their strategic partnerships with banks, brokers, or other financial services companies—or simply confuse their customer base.
A thorough legal review of marketing materials, websites, mobile apps (and app store listings), and social media posts can help ensure that statements accurately frame activities, represent capabilities, and withstand heightened supervisory and regulatory attention.
The Regulatory Atlas
Depending on a company’s activities, regulation of marketing can come from many sources, including, among others, the following:
These regulations are in certain ways consistent—all of them, for example, are concerned about financial services companies using false or misleading information, or otherwise engaging in fraudulent sales tactics. In other ways, though, they may differ substantially—for example, while client testimonials are treated skeptically under the Advisers Act, they are not subject to the same level of scrutiny in the context of banking services (so long as they are not deceptive or misleading). As part of their compliance with applicable regulations, fintech companies need to navigate these differences carefully.
Our interactive table outlines the types of marketing activities that can be implicated by various federal regulations applicable to advisers, broker-dealers, banks, and non-bank financial institutions. The interactive table serves as an easy-to-use guide, highlighting the key areas of regulatory focus and applicable guidance.
Practical Notes
Fintech companies, whether directly regulated themselves or indirectly regulated through their partnerships with regulated institutions, should be proactive and vigilant in ensuring that their marketing materials and public-facing statements are consistent with these rules. Marketing is a common area of enforcement for federal regulators of financial service providers, and the SEC, the FDIC and other federal banking agencies, the Consumer Financial Protection Bureau, and the FTC are actively enforcing their marketing regulations.
Fintech companies should also keep in mind the following practical considerations:
Wilson Sonsini Goodrich & Rosati is a trusted advisor to fintech companies and brings practical compliance experience with these and other regulations. We take a strategic, multidisciplinary approach to helping our clients navigate evolving legal issues in the rapidly expanding fintech sector. For additional information, please contact Amy Caiazza, Jess Cheng, Neel Maitra, Maneesha Mithal, Libby Weingarten, Mara Alioto, Clinton Oxford, or any other member of Wilson Sonsini’s fintech and financial services practice or privacy and cybersecurity practice.
Wilson Sonsini panelists Amy Caiazza, Jess Cheng, Neel Maitra, and Libby Weingarten will lead a discussion of how fintech companies can craft innovative marketing campaigns while navigating the complex web of federal regulations. In this program, the attorneys will explore the key regulatory frameworks that fintech companies must comply with when marketing their products and services and consider best practices and common pitfalls. Register here for the webinar, “Fintech Marketing – Navigating the Complex Waters of Federal Regulation,” to be held on February 14, 2024 (10:00-11:00 a.m. PT/ 1:00-2:00 p.m. ET).
[1] Following the adoption of the amended Marketing Rule, the Division of Examinations released a risk alert in 2022 and another in 2023 setting forth particular focus areas of the Marketing Rule for examinations.
[2] The Interagency Guidance on Third-Party Relationships: Risk Management provides banks with risk management guidance to follow when engaging with third-party partners, including fintech companies, and directs banks to evaluate whether they can appropriately mitigate risks associated with those third-party relationships. The FDIA and its implementing regulations require non-bank companies to support claims related to deposit insurance and provide certain disclosures when advertising deposit insurance.