Traditionally, those who fall under the regulatory umbrella of the Consumer Financial Protection Act (CFPA), referred to under the law as a “covered person,” are those who offer or provide a financial product or service for use by consumers and, thus, can be held liable for committing unfair, deceptive, or abusive acts or practices (UDAAPs).
The CFPA defines a service provider as “any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service.” The CFPA provides an exception for service provider solely that offer or provide to a covered person “time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media.”
In its new interpretive rule, the CFPB stated the “time or space” exception does not cover firms that are “materially” involved in the development of content strategy and defined a “material” service as one that’s “significant or important.” According to the CFPB, digital marketing providers are “materially involved” in the development of content strategy when they identify or select prospective customers or select or place content to encourage consumer engagement with advertising.
“Unlike most traditional media sources, digital marketing providers engaged in ad targeting and delivery are not solely providing airtime or physical space for ads,” the CFPB stated in its interpretive rule. “Rather, digital marketers commingle the targeting and delivery of advertisements with the provision of ‘time or space.’”
Unlike traditional advertising that relies on marketing a product or service to as wide an audience as possible, digital marketers seek to maximize individuals’ or groups’ interactions through targeted advertising services. In the financial services industry, specifically, “financial firms rely on the expertise and tools of digital marketing providers that offer sophisticated analytic techniques, aided by machine learning and advanced algorithms, to process large amounts of personal data and deliver highly targeted ads,” the CFPB stated.
From a legal and compliance standpoint, the interpretive rule means that digital service providers can also be found liable for UDAAP violations. “When Big Tech firms use sophisticated behavioral targeting techniques to market financial products, they must adhere to federal consumer financial protection laws,” CFPB Director Rohit Chopra stated in a press release. “Federal and state law enforcers can and should hold these firms accountable if they break the law.” 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.