Thank you for coming to Iowa to talk about consumer protection in the digital world. The pandemic has accelerated the digitization of our daily lives. Health, transportation, education and many other things have been transformed.

Financial services are no exception. Banks are opening storefronts in the metaverse. Relationship banking is at risk of being completely superseded by algorithmic banking.

Financial privacy and confidentiality were once seen as the touchstones of the banking system, but big tech companies’ interest in finding new ways to collect and monetize personal financial data is growing. Businesses are looking for data about what we spend our money on and where we buy it.

Over the years, state attorneys general have often led prosecutions over abuses by financial and technology companies. Increasingly, activities in both industries are converging.

Today, I would like to talk about the evolution of the advertising model. Next, we discuss former Housing Secretary Ben Carson’s complaints about his Facebook. This shows the big difference between traditional advertising and today’s digital he marketing. Finally, I would like to conclude with a discussion of the role of state enforcement agencies in cracking down on illegal activity at the intersection of consumer finance and digital marketing.

Escape from “time” and “space”

Advertising has long been a way for companies to increase awareness of their products and brands. For decades, radio, television and newspapers have provided the best advertising space. Broadcasters sold advertising time on radio and television programs, and newspapers sold page space.

A generation ago, we started seeing the advertising business take shape in the digital world. “Banner ads” and “pop-up ads” are the digital equivalent of newspaper ads. This was a big shift in the advertising market, but in many ways the fundamentals remained the same. In other words, a company bought time or space for advertising.

Today’s digital world is very different. The ads you see when watching videos on YouTube are different from commercial broadcasts on TV. YouTube wants commercials aimed at you. YouTube may earn money not only from views, but also from actions such as ad clicks.

If two people watch the same YouTube video, they will see different ads. These ads are personalized based on a psychographic profile created for each individual user by monitoring the devices and services accessed across the digital world. Also, today’s banner ads are different from the rotating billboards you see at stadiums. Banner ads target individuals, and networks run by big tech companies and other digital he marketing players can use the technology to essentially track you across the digital world with the same ads. A growing number of Americans are experiencing the feeling of being digitally stalked by certain advertising content.

Instead of replaying the same sales pitch over and over like TV commercials, digital marketing technology can deploy a digital sales force with detailed dossiers that are personalized for each consumer you sell to. The platforms with the greatest ability to target ads are those that accumulate vast amounts of personal data. Most people are increasingly realizing that this is not traditional passive advertising. It’s an amalgamation of advertising, private detectives, and digital door-to-door salespeople.

In particular, newsstand-purchased print magazine publishers sell space to give advertisers access to “features,” but today’s digital marketing is focused on user behavior, such as tracking sales conversions. are often monetized. This is more like a commission paid to a salesperson than typical advertising. Social media platforms and other ad networks are more than just a business of displaying ads, they are part of persuasion, a role that corporate marketing and product development departments have played for years.

Carson’s Complaint

The difference between simply providing “time” or “space” for advertising versus providing a physical service was the then-Housing and Urban Development secretary against Facebook, who alleged violations of the Fair Housing Act in 2019. It took center stage in Ben Carson’s accusations.

According to Carson’s complaint, Facebook helped advertisers limit the audience of their ads, allowing advertisers to target specific groups of people by excluding protected classes.

Carson’s complaint includes allowing advertisers to show ads only to men or women, not showing ads to people who may have disabilities, and showing ads to people of interest in certain countries. It includes examples of what not to do. Facebook allowed advertisers to not show ads to people within certain geographies or zip codes.

Carson’s complaint also states that Facebook’s tools are designed to maximize consumer engagement with advertising. For example, its Lookalike Audiences feature uses extensive behavioral data to create composite consumers who are most likely to engage with your ads. Facebook can then identify users similar to the composite and serve targeted ads. This feature can effectively filter out those who do not appear to be composite consumers.

To clarify: Ads were not shown to unselected groups, regardless of protected class. It prevented advertisers who wanted to reach a demographic from doing so. Even if an advertiser tries to target an audience that spans a broad spectrum of protected class groups, Facebook’s ad serving system will not allow diversity if the system determines that users with certain characteristics are most likely to engage with an ad. We don’t show ads to a large audience. Carson’s complaint argued that this was discriminatory and violated the Fair Housing Act.

As with Carson’s complaint, state attorneys general are already beginning to recognize that these platforms are not passive advertisers. The State of Washington recognizes that Facebook’s development and operation of a digital marketing platform that targets or excludes consumers based on certain immutable characteristics is illegal under state laws prohibiting unfair or deceptive conduct or practices. argued to be fair.

State Enforcement in the Financial Services Sector

This brings me to the state’s role in policing illegal activity in consumer financial services. As we have discussed with you before, Congress sought to redress the extreme abuses of the Office of the Comptroller of the Currency in the 2000s to undermine state legislatures and state law enforcement agencies that seek to protect consumers. In particular, the Consumer Financial Protection Act expressly authorizes states to take law enforcement action against covered financial firms, limiting the likelihood of a repeat abuse of federal preemption.

Congress has also long understood that service provider responsibilities are critical to ensuring sound oversight of banks and other financial firms, and the Consumer Financial Protection Act allows states to prevent a variety of fraudulent activities. It also allows prosecution of service providers in

Of course, some service providers do not play any significant role in the provision of financial products and services. Therefore, the Act exempts service providers who provide ministry services and service providers who “single” provide “time or space” for advertising.

However, when it comes to modern digital marketing platforms, these companies offer no space for static billboards. Instead, they are rewarded for identifying and analyzing potential users’ personal data, often turning user interactions into revenue for financial companies.

The services and tools a digital marketing company offers are important. Because it is these services (data, algorithms, platforms) that enable increased consumer engagement and advertising interaction. Without this service, the financial institution would have wanted to place ads on his website and be viewed by desired audiences.

Today, the CFPB issued a rule of interpretation explaining that the “time or space” service provider exemption generally does not apply to digital marketing services offered by major platforms. They may offer space for advertising, but these companies mix in many other features that go well beyond the exemption.

This makes us liable for violations of the Consumer Financial Protection Act in the event of fraud related to consumer financial products or services. These claims may be pursued by state attorneys general.


Relationship banking is under threat today. This is partly because our sensitive data is seen as more valuable to businesses than we actually are. Rather than encouraging tech giants to rush to seize our sensitive financial data or to circumvent existing laws that other companies must comply with, technological advances are helping us should contribute to the economic and social progress of It is important that we all work together to address this issue.

Our Interpretive Rules complement many other initiatives the CFPB is taking to prepare for the future of consumer finance as technology companies expand their reach. We have endeavored to limit abuse of the indemnifications granted by We cannot circumvent our obligation to clearly explain why a company refuses credit or otherwise makes an unfavorable decision simply because it used a complex algorithm that we do not understand. issued a legal interpretation confirming the We have ordered major tech companies to submit information about their plans to track our payments through digital wallets and how to kick participants off their payment platforms. I’ve relaunched the whistleblowing program to contact techs who have information about cheating. We have technologists and other experts on board to help assess data abuse and misuse, digital redlines, and more.

We are also working on new rules to give consumers more control over their financial data, using long-lost permissions. It also examines how certain activities of technology companies qualify for consumer reporting under the Fair Credit Reporting Act.

And of course, we are committed to helping you meet the new challenges of the digital world and fully supporting state enforcement of the Consumer Financial Protection Act. In exercising or attempting to exercise power under the law, the CFPB remains a partner in rooting out lawbreakers and keeping markets fair for consumers and honest businesses.

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