By Ashley Cianci | April 14, 2023

Episode Description

On this episode on the COMPLY podcast, we sit down with two PerformLine colleagues – Gianna Barrere, our Content Manager and Mike Gibney, our Client Solutions Manager and we discuss all things Udaap (or Unfair, Deceptive, Abusive Acts or Practices).

First we chat with Gianna about her newly released report: The Top UDAAP Compliance Issues Across Published Content, the methodology behind the report, and some of the key takeaways.

And then we chat with Mike about PerformLine’s rules engine, rulebooks – specifically those that help with UDAAP, and why it’s critical to take a proactive approach to marketing compliance.

Show Notes:

• The Top UDAAP Compliance Issues Across Published Content: https://bit.ly/3o5Z8OZ
• The UDAAP Content Library: https://bit.ly/3Uxo7aj
• 8 Steps to Reduce UDAAP Compliance Violations: https://bit.ly/4067yDA
• The Ultimate UDAAP Marketing Compliance Checklist for Consumer Finance Companies: https://bit.ly/3mraFrX
• Connect with Gianna: https://www.linkedin.com/in/gianna-barrere/
• Connect with Michael: https://www.linkedin.com/in/michaeldgibney/
• Connect with Ashley: https://www.linkedin.com/in/ashley-cianci/

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About COMPLY: The Marketing Compliance Podcast

The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level. 

Episode Transcript:

Ashley:
Hey there, COMPLY podcast listeners and welcome to this week’s episode. This week I sit down with two of my colleagues – Gianna Barrere, our Content Manager and Mike Gibney, our Client Solutions Manager here at PerformLine. And we discuss all things UDAAP, or Unfair, Deceptive, Abusive Acts or Practices. Gianna and I first chat through her newly released report, The Top UDAAP Compliance Issues Across Published Content, the methodology behind this report, and some of the key takeaways. And then I chat with Mike about PerformLine’s rules engine, rulebooks, and specifically those that help with UDAAP, and why it’s critical to take a proactive approach to marketing compliance. Thanks for listening and enjoy!

Ashley:
Mike and Gianna, welcome to the COMPLY podcast!

Micheal:
Thanks for having us.

Ashley:
I’m so excited to have you two on the podcast today. I’m gonna let them introduce themselves, but they are two heavy hitters as it comes to marketing compliance, content and the technology that we build here. So Gianna why don’t you go first, can you tell listeners who you are?

Gianna:
Sure. I’m Gianna, Content Marketing Manager here at PerformLine and I’m responsible for all of PerformLine’s content and strategy. So anything you see come from PerformLine, our blog posts, our webinars, our reports, I have a hand in.

Ashley:
And she’s not giving herself anywhere near enough credit. Gianna is incredible with content and all things marketing compliance. So thank you for being here, Gianna.

Gianna:
Of course!

Ashley:
And Mike, who we lovingly call Gib as well, welcome.

Michael:
There are a lot of Mikes in the world and certainly at PerformLine.

Ashley:
Absolutely.

Michael:
So, hey everybody. My name is Mike Gibney. I oversee our Client Solutions team here at PerformLine. So we sit on top of pre-sales client implementation and then monitoring our client health scores and their usage of our platform. While we oversee a number of things for both internal teams and our clients, the thing I’m most excited to talk about today is the creation and deployment of our PerformLine rulebooks across all of our clients’ applications.

Ashley:
Awesome. And he’s also not giving himself enough credit, but I will save that for the end when I ask Mike a bunch of questions about his day-to-day roles. So more to come, but thank you guys for the introduction. So for those who have not read it yet, as you can tell by the title of this podcast, this week we launched our latest report, The Top UDAAP Compliance Issues Across Published Content written by none other than our own Gianna on the call today. So this report uses data from the PerformLine platform to pull out top flagged and remediated UDAAP compliance categories and terms, and even shows examples of these issues from marketing channels such as web and on social. It is incredible. If you can’t tell, I’m gonna say that I’m gonna drop it in today’s show notes for you to read if you have not had a chance yet, but highly, highly recommend it. So Gianna, let’s start with some background on the report and on UDAAP itself. Let’s start with how UDAAP is defined; why is it important for those listening to ensure they comply with this regulation?

Gianna:
Sure. I’ll start with a quick disclaimer that I am not a UDAAP expert. And what I know is really just what I’ve learned from working at PerformLine and staying up to date on the industry news and writing my content. But in general, UDAAP is designed to protect consumers from unethical or misleading tactics that cause financial harm. It’s a fairly broad definition and is ambiguous by nature. So that it can cover a lot of different practices that can harm consumers. And UDAAP compliance is important for a few reasons. The obvious one is that failure to comply with UDAAP could lead to enforcement actions from the regulators. So including both heavy monetary fines and also those more structural in remedies. So things like bans on business practices, caps on size or growth, et cetera. On the flip side, complying with UDAAP also helps organizations protect consumers and in turn, maintain a positive brand reputation. Companies hit with UDAAP violations can quickly lose consumer trust and get a lot of negative publicity. And then lastly, UDAAP compliance, and this is really just compliance in general, but it can be a competitive advantage. So companies that prioritize consumer protection through UDAAP compliance are more likely to attract and retain their customers and they can set themselves apart from competitors who don’t.

Ashley:
That’s awesome. She says she’s not a UDAAP expert, but then quickly tells us all about UDAAP and why it’s important. I think the most, maybe not the most important word you said, but I think an important word is the word broad when you speak about UDAAP. So I know we’re gonna dig into that a lot coming up and then I know Mike’s gonna help us with that as well. But that broad aspect of it is really where clients and folks that we’ve talked to have the most issues with it, right? Is that fair?

Gianna:
Absolutely.

Ashley:
Awesome. So can you just give a little background on the methodology of the report and how you use data from the PerformLine platform to get your insights?

Gianna:
Yeah, so PerformLine monitors thousands upon thousands of pieces of content every single day for potential compliance violations using our proprietary rulebooks, which Mike will talk about in a bit. But essentially what we did is we took all of this data and we looked at which UDAAP categories and terms were most commonly flagged and remediated for compliance violations. So what I mean by remediated is that these issues weren’t just flagged by our platform, because sometimes, sometimes we’ll be flagged depending on how they’re used and in certain contexts they might not be considered UDAAP. But if they were remediated it means they were acted on by our clients telling us that this was a true UDAAP compliance violation, so everything in this report has been acted on and confirmed as UDAAP.

Ashley:
Perfect. And those issues that are commonly flagged and remediated, you kind of put them into these larger UDAAP categories, right? Yep. Specific terms and phrases and then you even have examples in the report. So people can actually visually see what to kind of look for when they’re out in the wild. So would you mind just giving a brief overview of those larger categories and some of the terms that people can expect in each?

Gianna:
Sure. So the report outlines five different categories, so I’ll start from the top. So the first one was exaggerated claims, so terms or phrases that exaggerate the benefits of a particular product or service. So terms like, free, no fees or a hundred percent. Second category is subjective language. So language that’s really open to interpretation, is really vague and ambiguous, or just doesn’t have a clear objective meaning. So terms here are things like the best or affordable or lowest. You know, what’s best or what’s affordable is totally dependent on the consumer’s unique circumstances. So things like this really need some substantiation behind them or something to back up what’s being said because it’s not a blanket term for all consumers. Third category is no barrier to entry, which is really just misleading acceptance language. So these terms or phrases imply that there’s, no obstacles or requirements for consumers to obtain or get approved for a particular financial product or a service.

Gianna:
So terms here include guarantee instant or like automatic approval. Fourth category is creating a false sense of urgency, which kind of has two use cases here. So the first one is language that is quite literally creates a false sense of urgency or panic in potential customers that can lead to them making a decision before they’ve had the chance to fully consider their options. The other circumstance is language that creates unrealistic expectations for consumers on how quickly they can get approval or access to a specific product. So things like immediately, seconds, special offer. As we know for any financial product or service, it takes at least a couple of business days to get approved and to get access to your funds. So it’s hard to promise instant access to whatever you’re applying for. 

Gianna:
And then the last category for UDAAP is kind of an interesting one. It’s around the term payday. And in this context we’ve seen unknown external third parties using brand names, logos, and information to falsely promote certain products or services as quote unquote payday loans, quick cash, instant money, so on to encourage customers to apply for that loan. So the customer thinks that they’re applying for a product from a certain company, but instead they’re giving that information to a fraudulent third party that has no relation to the brand that they’re actually promoting. So they submit this information and they kind of get stuck in these predatory payday loans and they think they’re applying for a product from this big and well-known company, but that’s not the case. And so that last one’s kind of a little bit unique cause this type of language isn’t typically coming from the organization itself. But it’s definitely something that they should be aware of and be monitoring for.

Ashley:
Absolutely. Wow. Incredibly robust. I think the categories alone are so helpful just to start to put a couple tactics to UDAAP, right, like thinking in those chunks at least that’s helpful for me to think about. So as I said, I will drop the link for the report in today’s show notes, hopefully Gianna’s tease of all of the goodness will encourage y’all to read it and like I said, real yet anonymized examples are in this report so you can share with your team, start to get an idea of kind of what UDAAP means and how you guys can start protecting against it. So thank you Gianna, the report is awesome.

Gianna:
Thank you.

Ashley:
So Mike, with this background on UDAAP and these major categories that listeners can be monitoring for, I wanna switch gears. Let’s start discussing PerformLine’s rulebooks and how we’ve created a specific set of rules to help with this category of issues. So to start, would you mind giving our listeners some background on what we mean when we say PerformLine rulebooks?

Michael:
Yeah, absolutely. So I think it’s important before we even start talking about the rulebooks, is about the rule engine, how these become part of our platform that are deployed across all of our clients’ applications. So the PerformLine rule engine at a really high level is the feature of our platform that allows our clients to monitor the presence or absence of terms and phrases at scale. And not even just like black and white, was it there? Was it not there? But also is it contextually relevant? Was it within a certain proximity of a certain trigger term or something like that? So I like to think that that’s our rule engine. It’s the mechanism by which the rulebooks are deployed which would really make kind of like our rulebooks kinda like the fuel to that engine.

Michael:
They’re all the terms and phrases that go into the rule engine that when grouped into certain categories, like a lot of the ones that Gianna just went over, allow our clients to make those observations at scale and then act on them within the UI and have some idea of what was flagged, but not only what was flagged, why it’s an issue, maybe this is that urgency issue or it was promissory language or subjective language. So I guess there’s a couple components to kind of go over when we’re talking about our rulebooks. Kind of what are, they how are they created, deployed, and updated as well. So these rulebooks and rule categories are basically groups of terms and phrases that roll up to those categories that Gianna was just talking about. So when we think of maybe a rule category around unfair urgency or abusive urgency tactics, these are all the terms and phrases like right now, limited time offer must act now, and all the various ways hundreds or thousands of ways that someone can say that.

Michael:
And not just like on a website, but also maybe in a call center or through like a text thread or an email where all of these things can come up. You know, these rulebooks are created using  a number of different tools, at PerformLine, and we certainly have a number of sources of data as well. I think the big things that we use to create rules at PerformLine first and foremost is all of our users at PerformLine. Everybody that’s in the PerformLine platform and uses our technology is on frontline defense every single day against potential marketers and advertisers using this kind of language. And they have a really close ear to the emerging deceptive tactics or dark patterns that are coming out now and being used across the web or any one of the other channels that we monitor.

Michael:
So taking that feedback directly from our users, matching that with what we’re hearing from the regulators and the changes that they’re making to regulations sometimes could be on a daily, monthly, weekly basis whenever it comes out, is what we use to kind of get us pointed in the right direction. And then as far as like coming up with all these various, like terms and phrases that we’re putting into all of our rules, you know, AI is a great usage of going out there and saying how can we create all these terms and phrases at scale? So we’re essentially saying, hey, what could a deceptive marketer advertiser use before they even know it themselves? And it’s a great usage of AI to be able to feed it, you know, tons of, of web data, acts and regulations and actions that were taken by folks like at the CFPB to say, what were the terms and phrases used and what else kind of sounds like that as well.

Michael:
So kind of like I said, using a combination of our users and kind of all the ears that we have out across the various industries we play in our relationships with regulators and all of you know, what they’re publishing and we’re reading and interpreting. And then data goes into the creation of our rules. As far as, you know, being deployed, whenever someone at PerformLine comes onto us, brand new client  they’re given a menu of all of our rules that we’ve already created where they basically just go through and check them off on a large list of what they want deployed in their applications on day one and they have full access to our entire library when they log into PerformLine for the first time. And then past that, once those rules are deployed across all the accounts we’re also making updates continually because everything is always, always changing.

Michael:
So we are creating new rules at PerformLine that get launched. I think one of the most notable ones that came out certainly in the last couple years, was, well first our Covid rules was a big rulebook that we created very quickly and launched at its peak in like that first couple months of 2020 and all the deceptive practices around, you know, loan programs from the government and people taking advantage of those. Second one a great update that I think we published recently is all of the work we’ve done around fair lending as well. Certainly it’s a concern from the regulators. Everybody knows it’s a concern in their own businesses. So we’ve created rules around those and are able to, to deploy them not only to our new clients coming on, but existing clients as well where they can subscribe to those rulebooks and have them ingested to their application.

Ashley:
Yeah, it’s amazing. I think it’s actually quite incredible to sit on this side of the house and watch what you guys build just to adapt to the environment that we’re in, given the current moment. Like you gave the Covid example, fair lending example, but yeah, that’s amazing. So two more things I I wanna touch on what you said, Mike, is I think it’s super important that we also know when we talk about monitoring, flagging, remediating, I think it’s like you said, what’s missing, what’s there, what’s missing, but also proximity. That’s very, very cool. But then also I think my general thought of like what you’re posting internally, but also what other people are posting on your behalf or what you may not even know is being posted about you too, right? Like that’s a huge, huge key component of the monitoring aspect. So I wanted to touch on that. And then I also just wanna touch on the AI aspect. We always say on the marketing side of the house of built on AI and machine learning, but with a human touch. And I think that human touch is what almost like a little bit of the secret sauce, right? Like you can use AI, we absolutely should be using it, but also having that human element be a part of it as well.

Michael:
Absolutely. It’s a great tool that allows you to act at scale and generate a lot of these big term lexicons that we have that fuel our rule engine. But we do still have those in-house experts that go in, curate that list, double check it, run it against experts that we know in the industry so that we know when we deploy it, we’ve used AI and have all the benefits of that, but certainly have the checks and balances in place to do it at scale with confidence.

Ashley:
Exactly. Awesome. So given today’s topic and episode can you fill us in on these rulebooks and what we have in place to help with UDAAP regulations specifically?

Michael:
Yeah, absolutely. So I gotta say Gianna kind of stole my thunder on this one a little bit, and she hit kind of like our biggest rule categories that we see you know, roll up to UDAAP violations that our clients are acting on right now. Whether that be like that subjective or superlative language is certainly very popular. Not only because it’s an easy way for maybe advertisers that are deep in an advertising network away from the original brand, they like to say things like the best and absolute guarantee and all those things. But even marketers that aren’t being, you know, malicious in intent  can use this language all the time without even thinking about it. So they’re common phrases that come up, not just from folks that are looking to deceive potentially but just an everyday mistake that might just get overlooked because works in copy really well.

Michael:
The big things that, you know, I’m really excited about kind of looking forward to is making improvements to our rulebook and doubling down on how we monitor for dark patterns. I think a lot of folks are starting to talk about how dark patterns are certainly a thing that’s been in the news and we’ve been talking about it for a couple of years, but I think that the regulators are starting to make a closer connection between dark patterns and UDAAP violations. So dark patterns are an interesting use case because they don’t typically like roll up to a certain subsection of some regulation, part B, chapter C, whatever it is. But they’re the deceptive or abusive tactics that these bad actors are using out in the marketplace. You know, one that we’re certainly very familiar with is that abusive urgency tactic of getting someone that may not be ready to actually sign up for a financial product to do it right now and kind of leading them in that way.

Michael:
But there’s certainly a number of other dark patterns and deceptive tactics that are emerging as well, which we are chasing down and building out new rules for on a daily basis. You know, some that are very familiar think of like a bait and switch. People don’t realize that bait and switch is also very prevalent in the consumer finance industry and the language used, around that is unique and something that we’re solving for. And, you know, another popular one may be analyzing the fine print on certain disclosures on the web where we talk about maybe some hidden fees or other components of these lending products that are maybe just like vaguely referenced but not clearly explained with a proper disclosure. And then using our rules and rules engine to identify, you know, ways that is found across the web. So there’s some exciting stuff. We’ve certainly been working a lot towards the regulations and tying our rules back to specific components of the regulations for the last couple years, but I think we’re kind of evolving to this new space of identifying dark patterns now and tying those back, which is really exciting.

Ashley:
Very, very cool. So everything that Gianna mentioned earlier in the episode, obviously the PerformLine rulebooks and platform can help monitor for, we do so already, which is how she built the report itself. Very cool though, to hear about this dark pattern evolution Mike. I think that’ll be maybe another cool piece of content in the future.

Michael:
And it certainly will be, you know, we’re doing a lot of work on our end because I think that it’s been clear that this is gonna be a need for all of our current clients and certainly our future ones. So we’re getting ahead of the ball and getting ready to publish some exciting things, I think later this year.

Ashley:
Very cool. Yeah with dark patterns definitely popping up more and more, so cannot wait. Awesome. All right, let’s wrap it up. Mike, any last comments or kind of ways to say why this is all so important to our listeners? Bring us home.

Michael:
Absolutely.

Ashley:
Give us the big why.

Michael:
I think that there’s a lot of reasons why these rules and the way that we deploy them are very important for all of our users. But like a couple of the ones that really stand out first is really speed to launch. Imagine you’re a big bank that’s using technology for the first time to monitor maybe a new fintech network, or you’re monitoring your brand through, you know, a series of affiliates working from other, you know, working through other affiliates. Launching a platform that can not only make all the discoveries for you, but also like how do you quantify the risk on all of those new discoveries. Building out the rules on your own can be a heavy lift up front, but when you have rulebooks that are pre-curated by a technology like us and they, we’ve used AI to build them out, but they’ve been gone over and combed through by industry experts for the last 10 or 15 years, you can deploy those, you know, immediately with confidence that you now have a technology and a tool that’s gonna go out and find these things for you.

Michael:
But that you’ve got rules that you know, are gonna deliver quality observations that are actionable as well right out of the gate. So you get to turn on your new technology and see value out of it from the very start. We see people starting to put violations that PerformLine found through their workflow in, you know, the first 30 to 60 days of having a kickoff call which is really exciting. The second thing that I’m seeing a lot is maybe with a younger fintech that a lot of times these new fintechs who are partnering with banks are being held to a higher level of scrutiny than previously kind of in the fintech world where they get a bank partner and now the bank partner is saying, well, you need to have a compliance program built out.

Michael:
And a lot of times fintech companies don’t even really have a compliance department. It might just be one of the hats that one person on their team is wearing. And when they get a tool like PerformLine, they can show the bank that they’re, you know, taking compliance as one of their top initiatives. But our rules play a really interesting part in that as well, in that they can give some level of guidance to these fintechs that are really just kind of wrapping their heads or their arms around these regulations and everything that they’re required to do by the banks. Now I always tell people that, you know, PerformLine is a technology provider and we are not we know, we do not provide legal advice,but we certainly sit on a lot of data and experience that a younger fintech or other consumer finance company can lean on and incorporate into part of their strategy as they’re developing their compliance program with technology.

Michael:
The last piece, and actually this is something that Gianna said earlier, is that complying with UDAAP, you know, UDAAP specifically is written to be broad and ambiguous so that regulators, rightfully so, could use it to go after all these deceptive tactics that they couldn’t even come up with, you know, when it was written years ago. But complying with something so broad and ambiguous is incredibly difficult for people who use Perform Line on a day-to-day basis. So I think our rulebooks also serve the purpose of kind of demystifying regulations and articulating exactly how someone may violate them. And certainly with the reports that we have, like Gianna’s been referencing during the podcast, you know, giving people an idea of what trending deceptive tactics are rolling up to UDAAP violations and just letting people have some really kind of concrete idea of how to defend themselves against these violations, something that’s really important and value that our users get from our rulebooks right out of the gate.

Ashley:
Awesome. So put my marketing hat on, I’m just gonna sum up, your three top takeaways of immediate impact, right? Like, get something in, get it on, get it monitoring, discovering, have that industry expertise. And you mentioned fintechs and absolutely we help with fintechs, but really we work across several consumer finance buckets. And we have been doing so for a years. So whatever company you work with, whatever industry you’re in, we’ve probably worked with somebody very similar and can absolutely, can lend, absolutely lend that expertise knowledge, your way. And then also just with UDAAP specifically to end on a UDAAP note. I love that it is broad and vague so that it gives these folks a pretty wide umbrella to catch folks, so don’t be caught. And again, we’re not UDAAP or a legal expert, but we sure do work with a lot of people to help them understand this. So we can definitely lend that knowledge, our rules and guidance for anybody in this consumer finance space. Anything, anything else guys?

Michael:
No, I say just thanks for having me on. You know, I’ve been a longtime listener, first time caller, this has been a lot of fun. I really, yeah, appreciate coming onto the show and talking about our rules. I think we’re doing a lot of really exciting things over here and it’s fun to chat about ’em with everybody.

Gianna:
And I said this last time I was on the podcast, but it’s really fun to kind of be on this side of our, you know, marketing things. Usually I’m on the backend writing content and kind of producing, so it’s fun to hop on here and kind of talk about what we’ve been doing. And Mike, it’s been fun to chat externally and kind of do we talk a lot about UDAAP and our rulebooks and just how we can work together on that content, so it’s been fun to do this altogether.

Ashley:
You guys are awesome. Thank you guys so much. And on top of the report, which again will be in today’s show notes, Gianna has and is continuing to publish tons and tons of resources around UDAAP, things are coming out from various regulatory bodies, but CFPB has also been publishing a lot of stuff around kind of this abusive practice and things of that nature. So we will continue to publish great content. I will drop as much as I can in today’s show notes. Thank you guys so much for joining.

Gianna:
Thank you.

Michael:
Thank you.

Ashley:
Thanks for listening to this episode of the COMPLY podcast. If UDAAP is at the top of your priority list, we have an entire library of resources that I will drop for you in today’s show notes. It includes a report we discussed today, an Ultimate UDAAP Compliance Checklist, and a guide on Eight Steps to Reduce UDAAP Compliance Violations. As always, for the latest content on all things marketing compliance, you can head to content.performline.com. Thanks for listening, and we’ll see you next time.