Limited Applicability of Consumer Financial Protection Act's “Time or Space” Exception With Respect to Digital Marketing Providers, 50556-50560 [2022-17699]
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Federal Register / Vol. 87, No. 158 / Wednesday, August 17, 2022 / Rules and Regulations
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For the reasons set out in the
preamble, FSIS amends 9 CFR parts 317
and 381 as follows:
PART 317—LABELING, MARKING
DEVICES, AND CONTAINERS
1. The authority citation for part 317
continues to read as follows:
■
[Amended]
2. Amend § 317.2 as follows:
a. In paragraph (h)(4), remove the
phrase ‘‘a declaration of 11⁄2 pounds
avoirdupois weight shall be expressed
as ‘‘Net Wt. 24 oz. (1 lb. 8 oz.),’’ ‘‘Net
Wt. 24 oz. (11⁄2 lb.),’’ or ‘‘Net Wt. 24 oz.
(1.5 lbs.).’’’’ and add in its place ‘‘a
declaration of 1 1⁄2 pounds avoirdupois
weight shall be expressed as ‘‘Net Wt.
24 oz.,’’ ‘‘Net Wt. 1 lb. 8 oz.,’’ ‘‘Net Wt.
11⁄2 lb.,’’ or ‘‘Net Wt. 1.5 lbs.’’.’’.
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■
■
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PART 381—POULTRY PRODUCTS
INSPECTION REGULATIONS
3. The authority citation for part 381
is revised to read as follows:
■
Authority: 7 U.S.C. 138f, 1633; 21 U.S.C.
451–472; 7 CFR 2.7, 2.18, 2.53.
4. Amend § 381.121 as follows:
a. Paragraph (c)(5) is revised.
b. In paragraph (c)(8), remove ‘‘,
except that such declaration of total
quantity need not be followed by an
additional parenthetical declaration in
terms of the largest whole units and
subdivisions thereof, as otherwise
required by this paragraph (c)’’ from the
first sentence;
■ c. In paragraph (c)(9)(i), remove the
phrase ‘‘, dual declaration,’’ from the
second and fourth sentences; and
■ d. In paragraph (c)(9)(iii), remove the
phrase ‘‘, dual declaration,’’.
The revision reads as follows:
■
■
■
§ 381.121
Authority: 21 U.S.C. 601–695; 7 CFR 2.18,
2.53.
§ 317.2
b. In paragraph (h)(5), remove ‘‘the
statement shall be expressed as a dual
declaration both in ounces and
(immediately thereafter in parentheses)
in pounds’’ and add in its place ‘‘the
statement shall be expressed in ounces
or in pounds’’.
■ c. In paragraph (h)(9)(i), remove the
phrase ‘‘, dual declaration,’’ from the
second and fourth sentences;
■ d. In paragraph (h)(9)(iii), remove the
phrase ‘‘, dual declaration,’’;
■ e. In paragraph (h)(9)(iv), remove
‘‘paragraphs (h) (3) and (5)’’ and add in
its place ‘‘paragraph (h)(3)’’;
■ f. In paragraph (h)(9)(v), remove
‘‘paragraphs (h)(3) and (h)(5)’’ and add
in its place ‘‘paragraph (h)(3)’’ and
remove the phrase ‘‘, and that the
statement be expressed both in ounces
and in pounds,’’;
■ g. In paragraph (h)(12), remove the
phrase ‘‘, except that such declaration of
total quantity need not be followed by
an additional parenthetical declaration
in terms of the largest whole units and
subdivisions thereof, as required by
paragraph (h)(5) of this section’’.
■
Quantity of contents.
*
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(c) * * *
(5) The terms ‘‘net weight’’ or ‘‘net
wt.’’ shall be used when stating the net
quantity of contents in terms of weight,
and the term ‘‘net contents’’ or
‘‘contents’’ when stating the net
quantity of contents in terms of fluid
measure. Except as provided in
§ 381.128, the statement shall be
expressed in terms of avoirdupois
weight or liquid measure. Where no
general consumer usage to the contrary
exists, the statement shall be in terms of
liquid measure, if the product is liquid,
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or in terms of weight if the product is
solid, semi-solid, viscous, or a mixture
of solid and liquid. On packages
containing less than 1 pound or 1 pint,
the statement shall be expressed in
ounces or fractions of a pint,
respectively. On packages containing 1
pound or 1 pint or more, and less than
4 pounds or 1 gallon, the statement shall
be expressed in ounces or in pounds
with any remainder in terms of ounces
or common or decimal fraction of the
pound, or in the case of liquid measure,
in the largest whole units with any
remainder in terms of fluid ounces or
common or decimal fraction of the pint
or quart. For example, a declaration of
three-fourths pound avoirdupois weight
shall be expressed as ‘‘Net Wt. 12 oz.’’;
a declaration of 11⁄2 pounds avoirdupois
weight shall be expressed as ‘‘Net Wt.
24 oz.,’’ ‘‘Net Wt. 1 lb. 8 oz.,’’ ‘‘Net Wt.
11⁄2 lb.,’’ or ‘‘Net Wt. 1.5 lbs.’’. However,
on random weight packages the
statement shall be expressed in terms of
pounds and decimal fractions of the
pound, for packages over 1 pound, and
for packages which do not exceed 1
pound the statement may be in decimal
fractions of the pound in lieu of ounces.
The numbers may be written in
provided the unit designation is printed.
Paragraphs (c)(8) and (9) of this section
permit certain exceptions to this
paragraph (c)(5) for multi-unit packages,
and random weight consumer size and
small packages (less than 1⁄2 ounce),
respectively.
*
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*
*
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Done in Washington, DC.
Paul Kiecker,
Administrator.
[FR Doc. 2022–17498 Filed 8–16–22; 8:45 am]
BILLING CODE 3410–DM–P
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Chapter X
Limited Applicability of Consumer
Financial Protection Act’s ‘‘Time or
Space’’ Exception With Respect to
Digital Marketing Providers
Consumer Financial Protection
Bureau.
ACTION: Interpretive rule.
AGENCY:
Section 1002 of the Consumer
Financial Protection Act of 2010 (CFPA)
defines the term ‘‘service provider’’ and
sets forth two exceptions to that
definition. Under one of those
exceptions, a person is not a service
provider solely by virtue of such person
offering or providing to a covered
SUMMARY:
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Federal Register / Vol. 87, No. 158 / Wednesday, August 17, 2022 / Rules and Regulations
person time or space for an
advertisement for a consumer financial
product or service through print,
newspaper, or electronic media. The
Consumer Financial Protection Bureau
(Bureau or CFPB) is issuing this
interpretive rule to address digital
marketing providers that commingle the
targeting and delivery of advertisements
to consumers, such as by using
algorithmic models or other analytics,
with the provision of advertising ‘‘time
or space.’’ Digital marketing providers
that are materially involved in the
development of content strategy would
not fall within the ‘‘time or space’’
exception as interpreted by the Bureau.
Accordingly, 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 typically service
providers under the CFPA.
This interpretive rule is effective
on August 17, 2022.
DATES:
FOR FURTHER INFORMATION CONTACT:
Christopher Davis, Attorney-Advisor;
Office of Fair Lending and Equal
Opportunity, at CFPB_FairLending@
cfpb.gov, or Brad Lipton, Senior
Counsel, Legal Division, at 202–435–
7000. If you require this document in an
alternative electronic format, please
contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Background
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Financial services companies rely on
digital marketing providers to target and
deliver advertisements across various
platforms to consumers on their behalf.
By doing so, financial services
companies may be able to engage with
audiences in ways that they were
previously unable to with traditional
advertising methods. Many modern
digital marketing providers (or ‘‘digital
marketers’’) play a dramatically
different role in consumer advertising
than did traditional media sources like
print newspapers or radio stations.
Many digital marketers target and
deliver ads to specific consumers 1 using
sophisticated analytical techniques,
including machine learning and
behavioral analytics, to process large
1 The targeting and delivery of advertisements
includes both the targeting and delivery of certain
ads to consumers generally at specific times to
increase or maximize engagement and the targeting
and delivery of ads to specific consumers at specific
times. For instance, a digital marketer may select
certain ads to show late at night to consumers
generally. Or a digital marketer may select certain
ads to show late at night to certain consumers.
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amounts of consumer data.2 In other
words, many digital marketers aggregate
and analyze immense amounts of
granular consumer data, and then use
that data to determine what
advertisements to provide to specific
consumers at what times. Accordingly,
digital marketing providers commingle
the service of targeting and delivering
advertisements with the activities of
traditional media sources in providing
airtime or physical space.
Digital marketing providers obtain
data from a variety of sources, including
but not limited to data collected directly
from consumers, for example when
registering for an account or when
conducting a search query into a search
bar. Further, digital marketers may
harvest a wide variety of consumer data
by monitoring and tracking a
consumer’s web activity, including for
example, their browsing history, their
activity while online, and their
geolocation.3 (This is sometimes called
‘‘surveillance advertising.’’ 4) Digital
marketers may also obtain data from
third-party data brokers or ‘‘secondparty’’ partnerships with other
companies.5 Using these tools and
others, digital marketers collect granular
consumer data that they analyze to
develop insights about consumers’
behavior more broadly.6
The insights that digital marketing
providers develop enable them to offer
financial services companies targeted
advertising services. For example,
collected data from individual
consumers can be analyzed by these
marketers and used to segment
consumers across various groupings,
such as by age, location, or specific
interests (e.g., ‘‘concert goers’’). After
these categories have been developed,
firms that use digital marketing
providers to acquire customers can
select (or exclude) certain types of
customers.7
In contrast, digital marketers may also
target advertisements at specific times
based on context, i.e., the content that
a user is currently viewing. Such
contextual advertisements more closely
resemble traditional ads users might
find in other spaces—such as an ad for
a sporting goods store aired during a
2 See
C.A. Summers, R.W. Smith, and R.W.
Reczek, ‘‘An audience of one: Behaviorally targeted
ads as implied social labels,’’ Journal of Consumer
Research, vol. 43, no. 1, pp. 156–178 (June 2016).
3 See Paige M. Boshell, The Power of Place:
Geolocation Tracking and Privacy, Bus. Law Today
(Mar. 2019).
4 See Shoshana Zuboff, The Age of Surveillance
Capitalism: The Fight for a Human Future at the
New Frontier of Power (2019).
5 See supra note 3.
6 See supra note 2.
7 See id.
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televised basketball match or a print
clothing ad placed in a fashion
magazine—as they are based on the
contents of what is being displayed, not
consumer-specific data.
Digital marketers engaged in ad
targeting and delivery may operate the
websites or platforms on which ads
appear, or they may not. In either case,
digital marketers serve as an
intermediary between the financial
services company and consumers.
The ways in which digital marketing
providers specifically target ads are
varied and evolve over time. Ultimately,
the digital marketer may decide which
group(s) the consumer belongs in and
which financial services companies
desire to advertise to that group, and
may select the specific ad to display to
that consumer and/or when to display
the ad based on other factors (e.g., the
amount a firm is willing to pay to
display the ad). Accordingly, many
digital marketing providers are
materially involved in the development
of ‘‘content strategy’’ 8 by identifying or
selecting prospective customers and/or
selecting or placing content to affect
consumer engagement, including
purchasing or adoption behavior. These
activities go well beyond the activities
of traditional media sources, such as
print newspapers or radio, that solely
passively provided airtime or physical
space for advertisements.
II. Analysis
Service Providers
A person is a ‘‘covered person’’ under
the CFPA, and thus subject to that law,
including its prohibition on unfair,
deceptive, or abusive acts or practices
(UDAAPs), if it offers or provides a
financial product or service for use by
consumers primarily for personal,
family, or household purposes.9
‘‘Service provider[s]’’ to covered
persons are also subject to the CFPA,
including its UDAAP prohibition.10
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
8 Content strategy is ‘‘the strategy for the
distribution of th[e] content’’ as well as ‘‘the set of
methods and guidelines for the development and
curation of content.’’ Christen Geiler, Information
Architecture vs Content Strategy—and Why YOU
Need Both, Digital.gov (July 18, 2016), https://
digital.gov/2016/07/18/information-architecture-vscontent-strategy-and-why-you-need-both/.
9 See 12 U.S.C. 5481(5), (6), (15)(A); 5531; 5536.
10 See 12 U.S.C. 5481(26); 5531; 5536. As the
CFPB has explained, discrimination may constitute
an unfair act or practice that violates the CFPA’s
UDAAP prohibition. See CFPB UDAAP Exam
Manual (updated Apr. 11, 2022).
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Federal Register / Vol. 87, No. 158 / Wednesday, August 17, 2022 / Rules and Regulations
service.’’ 11 The term ‘‘service provider’’
includes, but is not limited to, a person
that ‘‘participates in designing,
operating, or maintaining the consumer
financial product or service’’ or
‘‘processes transactions relating to the
consumer financial product or
service.’’ 12 The term ‘‘service provider,’’
however, ‘‘does not include a person
solely by virtue of such person offering
or providing to a covered person’’ either
‘‘a support service of a type provided to
businesses generally or a similar
ministerial service,’’ or ‘‘time or space
for an advertisement for a consumer
financial product or service through
print, newspaper, or electronic
media.’’ 13
Material Service
When digital marketing providers are
materially involved in the development
of content strategy, they typically
provide a material service. Unlike most
traditional media sources, digital
marketing providers engaged in ad
targeting and delivery are not solely
providing airtime or physical space for
ads. Rather, digital marketers
commingle the targeting and delivery of
advertisements with the provision of
‘‘time or space.’’
A ‘‘material’’ service is a service that
is significant or important.14 When
digital marketers identify or select
prospective customers and/or select or
place content to affect consumer
engagement, including purchasing or
adoption behavior, they are providing a
significant—and thus ‘‘material’’—
service provided to covered persons. In
particular, identifying prospective
customers and then attempting to
acquire those customers is a significant
component of the ‘‘offering’’ of a
consumer financial product or service,
which is part of the legally relevant test
for determining that a firm is a ‘‘covered
person.’’ 15
Indeed, modern digital ad targeting
and content delivery typically consists
of many functions—such as lead
generation,16 customer acquisition, or
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11 12
U.S.C. 5481(26)(A).
12 12 U.S.C. 5481(26)(B)(i), (ii). Of course, nothing
in this interpretive rule precludes a digital
marketing provider from being considered a
covered person based on its acts and practices.
Indeed, by engaging in consumer data collection,
tracking, analysis, and maintenance activities,
digital marketing providers may be covered
persons. See 12 U.S.C. 5481(15)(A)(ix).
13 12 U.S.C. 5481(26)(B)(i), (ii).
14 See Merriam Webster’s Dictionary (online ed.)
(defining ‘‘material’’ as ‘‘having real importance or
great consequences’’); Black’s Law Dictionary (11th
ed. online) (defining ‘‘material’’ as ‘‘significant;
essential’’).
15 See 12 U.S.C. 5481(6).
16 See, e.g., Complaint for Violations of the
Consumer Financial Protection Act of 2010,
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marketing analysis or strategy—that
would often be performed by covered
persons. For example, a covered person
may measure the effectiveness of certain
marketing efforts by calculating a
‘‘customer acquisition rate.’’ 17
Similarly, a covered person’s marketing
group may analyze where to purchase
advertising across multiple channels to
maximize impact.18 The involvement in
the development of content strategy by
digital marketing providers increasingly
resembles these functions and others
often performed by covered persons
themselves (although the services are
often carried out in a more sophisticated
way, based on the digital marketers’
data and technology). Accordingly,
digital marketers that are materially
involved in the development of content
strategy by identifying or selecting
prospective customers and/or selecting
or placing content to affect consumer
engagement, including purchasing or
adoption behavior, typically provide a
material service.
‘‘Time or Space’’ Exception
As noted above, the CFPA provides
that the term service provider ‘‘does not
include a person solely by virtue of such
person offering or providing to a
covered person’’ either ‘‘a support
service of a type provided to businesses
generally or a similar ministerial
service,’’ or ‘‘time or space for an
advertisement for a consumer financial
product or service through print,
newspaper, or electronic media.’’ 19 The
reference to ‘‘solely’’ providing ‘‘time or
space for an advertisement’’ means that
digital marketers that provide additional
services beyond ‘‘time or space’’—i.e.,
beyond airtime or physical space for the
ad—do not qualify for the exception.
Accordingly, when digital marketers are
materially involved in the development
of content strategy in addition to
providing airtime or physical space,
they fall outside the exception for
‘‘solely’’ providing ‘‘time or space.’’
Consumer Fin. Prot. Bureau v. D and D Marketing,
Inc., No. 2:15–cv–9692 (filed Dec. 17, 2015), https://
files.consumerfinance.gov/f/201512_cfpb_
complaint-v-d-and-d-marketing-inc-et-al.pdf
(alleging that a lead aggregator is a ‘‘service
provider’’ because it sold consumer loan
applications as ‘‘leads’’ to payday and installment
lenders who are ‘‘covered persons’’).
17 See, e.g., Jacquelyn S. Thomas, Werner
Reinartz, and V. Kumar, ‘‘Getting the Most out of
All Your Customers,’’ Harvard Business Review
(July–August 2004) (noting that ‘‘most companies
still use the customer acquisition rate’’).
18 See, e.g., Wes Nichols, ‘‘Advertising Analytics
2.0,’’ Harvard Business Review (March 2013)
(noting that ‘‘most businesses still . . . measured
how [their] TV, print, radio, and online ads each
functioned independently to drive sales’’).
19 12 U.S.C. 5481(26)(B)(i), (ii).
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The ‘‘service provider’’ definition
should be interpreted as a cohesive
whole.20 Thus, the ‘‘time or space’’
exception should be interpreted
alongside its inclusion with the
exception for ‘‘a support service of a
type provided to businesses generally or
a similar ministerial service.’’ 21 Firms
that provide a ‘‘ministerial’’ service to
financial institutions are not materially
involved in the marketing or
distribution of the consumer financial
product or service; they are not typically
involved in the identification or
selection of prospective customers, nor
do they select or place content to affect
consumer engagement. For example, a
firm that furnishes broadband access to
a financial institution is not involved in
the strategic marketing and distribution
of the consumer financial product or
service and is generally not providing a
material service.
Additionally, the ‘‘time or space’’
exception refers to ‘‘electronic media’’
within the phrase ‘‘print, newspaper, or
electronic media.’’ 22 This phrasing—
especially alongside the other
exemption for ‘‘a support service of a
type provided to businesses generally or
a similar ministerial service’’—indicates
that the ‘‘time or space’’ exception
should be interpreted to refer to the
offering of advertising in a manner
similar to that was generally performed
by traditional media sources, such as
‘‘print’’ or ‘‘newspaper.’’ 23 A traditional
media source typically provided ‘‘time
or space’’—i.e., the airtime or physical
space for the ad—with relatively little
(i.e., largely ‘‘ministerial’’) involvement
in the development of content
strategy.24
To be sure, some traditional media
sources may have been involved in the
selection of the audience for or content
of ads to some degree (such as by
allowing businesses to select advertising
space in a geographic-specific section of
a newspaper to businesses operating in
that geographic area or putting
advertisements for financial services in
the financial section of the newspaper).
But traditional media sources were
typically not materially involved in the
development of content strategy; in the
main, their function was solely to
provide ‘‘time or space’’ by operating as
20 See, e.g., Gustafson v. Alloyd Co., Inc., 513 U.S.
561, 569 (1995) (noting that ‘‘the Act is to be
interpreted as a symmetrical and coherent
regulatory scheme’’).
21 12 U.S.C. 5481(26)(B)(i), (ii).
22 12 U.S.C. 5481(26)(B)(i).
23 Cf. Gustafson, 513 U.S. at 576 (‘‘[T]he term
‘written communication’ must be read in context to
refer to writings that, from a functional standpoint,
are similar to the terms ‘notice, circular, and
advertisement.’ ’’).
24 12 U.S.C. 5481(26)(B)(i), (ii).
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passive conduits of information
provided by their customers.
Indeed, when digital marketers are
materially involved in the development
of content strategy, the marketers
perform functions that would often
traditionally be undertaken by the
covered person itself, rather than by a
traditional media outlet. For example, as
noted above, a covered person’s
marketing group may analyze where or
when to purchase advertising across
multiple channels to maximize
impact.25 Of course, covered persons
may sometimes engage third-party
vendors for these activities. For
example, they may engage an
advertising or consulting firm to
perform marketing analysis. But this
would not typically be a service that
was performed by a traditional media
source, such as a newspaper or radio
station. The enterprises or firms
providing these services may be
‘‘service providers’’ under the CFPA,
but a media source that merely provided
airtime or physical space would fall into
the ‘‘time or space’’ exception and
would not be a service provider.
Specific Circumstances
The conduct of digital marketers that
provide services to covered persons
varies widely and, depending on the
conduct, may or may not fall within the
‘‘time or space’’ exception. Under the
interpretation of the definition of
‘‘service provider’’ described above, the
role played by the digital marketing
provider—i.e., whether the digital
marketing provider is materially
involved in the development of content
strategy by identifying or selecting
prospective customers and/or selecting
or placing content to affect consumer
engagement—will determine whether
the advertiser falls within the ‘‘time or
space’’ exception. Increasingly, the role
typically played by digital marketers fall
outside the exception and the digital
marketers are typically service providers
under the CFPA.
In certain circumstances, the digital
marketing provider is only minimally
involved in identifying or selecting
prospective customers or selecting or
placing content to affect consumer
engagement. For instance, digital
marketers may offer covered persons the
ability to choose to run an
advertisement on a particular web page
or application of the covered person’s
choosing, with advertisements seen by
any user of that page or application. In
25 See, e.g., Wes Nichols, ‘‘Advertising Analytics
2.0,’’ Harvard Business Review (March 2013)
(noting that ‘‘most businesses still . . . measured
how [their] TV, print, radio, and online ads each
functioned independently to drive sales’’).
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these circumstances, the digital
marketer would typically fall within the
‘‘time or space’’ exception. The digital
marketer in this situation is ‘‘solely’’
providing ‘‘time or space’’ for the ad, in
the sense of airtime or physical space
for the ad, without commingling
targeting or delivery of the
advertisements. Moreover, the digital
marketer’s conduct in these
circumstances is similar to a traditional
media source (such as a newspaper or
radio station) that offered
advertisements directed at a particular
market of the covered person’s
choosing, rather than a function
traditionally performed by a covered
person itself.
Digital marketing providers may also
target and deliver the advertisements to
users with certain characteristics (such
as demographics, geography, online
behavior (such as particular keyword
searches), or offline behavior). In some
circumstances, the covered person may
provide an audience of existing users
and specify that advertisements be
provided to similar consumers. While
the covered person may specify certain
parameters of the intended audience for
a specific consumer financial product or
service, it is the digital marketers’ ad
targeting and delivery algorithms that
identify the audience with the desired
characteristics and determine whether
and/or when specific consumers see an
advertisement.26
Digital marketing providers do not fall
within the ‘‘time or space’’ exception if
they target and deliver advertisements
to users with certain characteristics,
even if those characteristics are
specified by the covered person. In
these circumstances, although the
covered person also plays a role, the
digital marketer selects, including
through its algorithms and data, the
specific audience that sees the
advertisement for the covered person’s
consumer financial product or service.
The selection of specific consumers to
see specific ads goes beyond solely
selling airtime or physical space as
performed by traditional media sources
such as newspapers or radio. When
digital marketers target and deliver
advertisements to users with certain
characteristics, the digital marketer is
materially involved in the development
of content strategy and is not covered by
the ‘‘time or space’’ exception.
Moreover, when digital marketers
target and deliver advertisements to
users with certain characteristics, the
selection of the audience through
algorithms and data is akin to a
customer acquisition function that
would traditionally be performed inhouse by a covered person (or a vendor
other than a traditional media source,
such as a consulting firm). Accordingly,
digital marketers that target and deliver
advertisements to users with certain
characteristics specified by the covered
person are typically service providers
under the CFPA.
Similarly, digital marketing providers
do not fall into the ‘‘time or space’’
exception if a covered person identifies
particular users by name and the digital
marketer targets and delivers the
advertisements to those users at specific
times to increase or maximize
engagement. The provision of the
service of analyzing when
advertisements should appear goes
beyond ‘‘solely’’ selling airtime or
physical space as performed by
traditional media sources such as
newspapers or radio. To be sure, a
traditional media source might have
provided some basic information to
firms about when to air particular
advertisements, but the business
purchasing the ad was generally the
entity that made the decision about
when and where to place the ad. Here,
the use of algorithms and businessspecific data to determine when to
display a specific business’ ads to
specific consumers to affect consumer
engagement extends well beyond the
activities performed by a traditional
media source.
There are also circumstances in which
the digital marketing provider plays an
even more significant role in
determining which specific consumers
see digital advertisements, such as by
determining or suggesting to the covered
person which users are the most
appropriate audience for the covered
person’s advertisements (rather than
receiving such direction from the
covered person). Digital marketers may
determine who is the appropriate
audience to receive ads based on, for
instance, the content of the particular
ad, the type of businesses being
advertised, the marketer’s own
knowledge of a particular user’s
characteristics and behavior (including
offline behavior), the behavior of other
users, and past user engagement with
similar types of ads.27
In circumstances such as these in
which a digital marketing provider
plays an even more significant role in
26 See, e.g., Charge of Discrimination at 5 ¶ 17,
Facebook, Inc., No. 01–18–0323–8 (Dep’t of Hous.
& Urban Dev. Mar. 28, 2019), https://www.hud.gov/
sites/dfiles/Main/documents/HUD_v_Facebook.pdf.
27 See, e.g., Charge of Discrimination at 4 ¶ 16,
Facebook, Inc., No. 01–18–0323–8 (Dep’t of Hous.
& Urban Dev. Mar. 28, 2019), https://www.hud.gov/
sites/dfiles/Main/documents/HUD_v_Facebook.pdf.
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50560
Federal Register / Vol. 87, No. 158 / Wednesday, August 17, 2022 / Rules and Regulations
determining which specific users see
digital advertisements, such as by
determining or suggesting which users
are the appropriate audience for
advertisements, the digital marketer
does not fall within the ‘‘time or space’’
exception and is typically a service
provider under the CFPA. Determining
which users are the appropriate
audience for a particular covered
person’s advertisement is well beyond
providing airtime or physical space. To
the contrary, determining the
appropriate audience is much more
similar to the function traditionally
performed by a covered person’s own
customer acquisition or marketing group
than by a traditional media source.
Indeed, identifying or selecting
prospective customers for a covered
person’s business is similar to the
function of a ‘‘lead generator’’ that
would be considered a service provider
under the CFPA. Accordingly, digital
marketers that, for example, determine
or suggest which users are the
appropriate audience for advertisements
are materially involved in the
development of content strategy, do not
fall under the ‘‘time or space’’
exception, and are typically service
providers under the CFPA.
JSPEARS on DSK121TN23PROD with RULES
III. Regulatory Matters
This is an interpretive rule issued
under the Bureau’s authority to interpret
the CFPA, including under section
1022(b)(1) of the CFPA, which
authorizes guidance as may be
necessary or appropriate to enable the
Bureau to administer and carry out the
purposes and objectives of Federal
consumer financial laws, such as the
CFPA.28
As an interpretive rule, this rule is
exempt from the notice-and-comment
rulemaking requirements of the
Administrative Procedure Act.29
Because no notice of proposed
rulemaking is required, the Regulatory
Flexibility Act does not require an
initial or final regulatory flexibility
analysis.30 The Bureau also has
determined that this interpretive rule
does not impose any new or revise any
existing recordkeeping, reporting, or
disclosure requirements on covered
entities or members of the public that
would be collections of information
requiring approval by the Office of
Management and Budget under the
Paperwork Reduction Act.31
28 12
U.S.C. 5512(b)(1).
U.S.C. 553(b).
30 5 U.S.C. 603(a), 604(a).
31 44 U.S.C. 3501–3521.
29 5
VerDate Sep<11>2014
16:10 Aug 16, 2022
Pursuant to the Congressional Review
Act,32 the Bureau will submit a report
containing this interpretive rule and
other required information to the U.S.
Senate, the U.S. House of
Representatives, and the Comptroller
General of the United States prior to the
rule’s published effective date. The
Office of Information and Regulatory
Affairs has designated this interpretive
rule as not a ‘‘major rule’’ as defined by
5 U.S.C. 804(2).
Rohit Chopra,
Director, Consumer Financial Protection
Bureau.
[FR Doc. 2022–17699 Filed 8–16–22; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2022–0990; Project
Identifier MCAI–2022–00372–T; Amendment
39–22137; AD 2022–16–08]
RIN 2120–AA64
Airworthiness Directives; Airbus
Canada Limited Partnership (Type
Certificate Previously Held by C Series
Aircraft Limited Partnership (CSALP);
Bombardier, Inc.) Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule; request for
comments.
AGENCY:
The FAA is adopting a new
airworthiness directive (AD) for certain
Airbus Canada Limited Partnership
Model BD–500–1A10 and BD–500–
1A11 airplanes. This AD was prompted
by a dual-engine automatic shutdown
on landing. This AD requires revising
the existing airplane flight manual
(AFM) to incorporate a new normal
procedure and revised non-normal
procedures, as specified in a Transport
Canada Civil Aviation (TCCA) AD,
which is incorporated by reference. The
FAA is issuing this AD to address the
unsafe condition on these products.
DATES: This AD becomes effective
September 1, 2022.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of September 1, 2022.
The FAA must receive comments on
this AD by October 3, 2022.
ADDRESSES: You may send comments,
using the procedures found in 14 CFR
SUMMARY:
32 5
Jkt 256001
PO 00000
U.S.C. 801 et seq.
Frm 00008
Fmt 4700
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11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: Deliver to Mail
address above between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
For material incorporated by reference
(IBR) in this AD, contact TCCA,
Transport Canada National Aircraft
Certification, 159 Cleopatra Drive,
Nepean, Ontario K1A 0N5, Canada;
telephone 888–663–3639; email ADCN@tc.gc.ca; internet tc.canada.ca/en/
aviation. You may view this material at
the FAA, Airworthiness Products
Section, Operational Safety Branch,
2200 South 216th St., Des Moines, WA.
For information on the availability of
this material at the FAA, call 206–231–
3195. It is also available in the AD
docket at www.regulations.gov by
searching for and locating Docket No.
FAA–2022–0990.
Examining the AD Docket
You may examine the AD docket at
www.regulations.gov by searching for
and locating Docket No. FAA–2022–
0990; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The AD docket contains this AD, the
mandatory continuing airworthiness
information (MCAI), any comments
received, and other information. The
street address for Docket Operations is
listed above.
FOR FURTHER INFORMATION CONTACT:
Jiwan Karunatilake, Aerospace
Engineer, Airframe and Propulsion
Section, FAA, New York ACO Branch,
1600 Stewart Avenue, Suite 410,
Westbury, NY 11590; telephone 516–
228–7300; email 9-avs-nyaco-cos@
faa.gov.
SUPPLEMENTARY INFORMATION:
Comments Invited
The FAA invites you to send any
written data, views, or arguments about
this final rule. Send your comments to
an address listed under ADDRESSES.
Include ‘‘Docket No. FAA–2022–0990;
Project Identifier MCAI–2022–00372–T’’
at the beginning of your comments. The
most helpful comments reference a
specific portion of the final rule, explain
the reason for any recommended
change, and include supporting data.
E:\FR\FM\17AUR1.SGM
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Agencies
- CONSUMER FINANCIAL PROTECTION BUREAU
[Federal Register Volume 87, Number 158 (Wednesday, August 17, 2022)]
[Rules and Regulations]
[Pages 50556-50560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17699]
=======================================================================
-----------------------------------------------------------------------
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Chapter X
Limited Applicability of Consumer Financial Protection Act's
``Time or Space'' Exception With Respect to Digital Marketing Providers
AGENCY: Consumer Financial Protection Bureau.
ACTION: Interpretive rule.
-----------------------------------------------------------------------
SUMMARY: Section 1002 of the Consumer Financial Protection Act of 2010
(CFPA) defines the term ``service provider'' and sets forth two
exceptions to that definition. Under one of those exceptions, a person
is not a service provider solely by virtue of such person offering or
providing to a covered
[[Page 50557]]
person time or space for an advertisement for a consumer financial
product or service through print, newspaper, or electronic media. The
Consumer Financial Protection Bureau (Bureau or CFPB) is issuing this
interpretive rule to address digital marketing providers that commingle
the targeting and delivery of advertisements to consumers, such as by
using algorithmic models or other analytics, with the provision of
advertising ``time or space.'' Digital marketing providers that are
materially involved in the development of content strategy would not
fall within the ``time or space'' exception as interpreted by the
Bureau. Accordingly, 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 typically service
providers under the CFPA.
DATES: This interpretive rule is effective on August 17, 2022.
FOR FURTHER INFORMATION CONTACT: Christopher Davis, Attorney-Advisor;
Office of Fair Lending and Equal Opportunity, at
[email protected], or Brad Lipton, Senior Counsel, Legal
Division, at 202-435-7000. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Financial services companies rely on digital marketing providers to
target and deliver advertisements across various platforms to consumers
on their behalf. By doing so, financial services companies may be able
to engage with audiences in ways that they were previously unable to
with traditional advertising methods. Many modern digital marketing
providers (or ``digital marketers'') play a dramatically different role
in consumer advertising than did traditional media sources like print
newspapers or radio stations. Many digital marketers target and deliver
ads to specific consumers \1\ using sophisticated analytical
techniques, including machine learning and behavioral analytics, to
process large amounts of consumer data.\2\ In other words, many digital
marketers aggregate and analyze immense amounts of granular consumer
data, and then use that data to determine what advertisements to
provide to specific consumers at what times. Accordingly, digital
marketing providers commingle the service of targeting and delivering
advertisements with the activities of traditional media sources in
providing airtime or physical space.
---------------------------------------------------------------------------
\1\ The targeting and delivery of advertisements includes both
the targeting and delivery of certain ads to consumers generally at
specific times to increase or maximize engagement and the targeting
and delivery of ads to specific consumers at specific times. For
instance, a digital marketer may select certain ads to show late at
night to consumers generally. Or a digital marketer may select
certain ads to show late at night to certain consumers.
\2\ See C.A. Summers, R.W. Smith, and R.W. Reczek, ``An audience
of one: Behaviorally targeted ads as implied social labels,''
Journal of Consumer Research, vol. 43, no. 1, pp. 156-178 (June
2016).
---------------------------------------------------------------------------
Digital marketing providers obtain data from a variety of sources,
including but not limited to data collected directly from consumers,
for example when registering for an account or when conducting a search
query into a search bar. Further, digital marketers may harvest a wide
variety of consumer data by monitoring and tracking a consumer's web
activity, including for example, their browsing history, their activity
while online, and their geolocation.\3\ (This is sometimes called
``surveillance advertising.'' \4\) Digital marketers may also obtain
data from third-party data brokers or ``second-party'' partnerships
with other companies.\5\ Using these tools and others, digital
marketers collect granular consumer data that they analyze to develop
insights about consumers' behavior more broadly.\6\
---------------------------------------------------------------------------
\3\ See Paige M. Boshell, The Power of Place: Geolocation
Tracking and Privacy, Bus. Law Today (Mar. 2019).
\4\ See Shoshana Zuboff, The Age of Surveillance Capitalism: The
Fight for a Human Future at the New Frontier of Power (2019).
\5\ See supra note 3.
\6\ See supra note 2.
---------------------------------------------------------------------------
The insights that digital marketing providers develop enable them
to offer financial services companies targeted advertising services.
For example, collected data from individual consumers can be analyzed
by these marketers and used to segment consumers across various
groupings, such as by age, location, or specific interests (e.g.,
``concert goers''). After these categories have been developed, firms
that use digital marketing providers to acquire customers can select
(or exclude) certain types of customers.\7\
---------------------------------------------------------------------------
\7\ See id.
---------------------------------------------------------------------------
In contrast, digital marketers may also target advertisements at
specific times based on context, i.e., the content that a user is
currently viewing. Such contextual advertisements more closely resemble
traditional ads users might find in other spaces--such as an ad for a
sporting goods store aired during a televised basketball match or a
print clothing ad placed in a fashion magazine--as they are based on
the contents of what is being displayed, not consumer-specific data.
Digital marketers engaged in ad targeting and delivery may operate
the websites or platforms on which ads appear, or they may not. In
either case, digital marketers serve as an intermediary between the
financial services company and consumers.
The ways in which digital marketing providers specifically target
ads are varied and evolve over time. Ultimately, the digital marketer
may decide which group(s) the consumer belongs in and which financial
services companies desire to advertise to that group, and may select
the specific ad to display to that consumer and/or when to display the
ad based on other factors (e.g., the amount a firm is willing to pay to
display the ad). Accordingly, many digital marketing providers are
materially involved in the development of ``content strategy'' \8\ by
identifying or selecting prospective customers and/or selecting or
placing content to affect consumer engagement, including purchasing or
adoption behavior. These activities go well beyond the activities of
traditional media sources, such as print newspapers or radio, that
solely passively provided airtime or physical space for advertisements.
---------------------------------------------------------------------------
\8\ Content strategy is ``the strategy for the distribution of
th[e] content'' as well as ``the set of methods and guidelines for
the development and curation of content.'' Christen Geiler,
Information Architecture vs Content Strategy--and Why YOU Need Both,
Digital.gov (July 18, 2016), https://digital.gov/2016/07/18/information-architecture-vs-content-strategy-and-why-you-need-both/.
---------------------------------------------------------------------------
II. Analysis
Service Providers
A person is a ``covered person'' under the CFPA, and thus subject
to that law, including its prohibition on unfair, deceptive, or abusive
acts or practices (UDAAPs), if it offers or provides a financial
product or service for use by consumers primarily for personal, family,
or household purposes.\9\ ``Service provider[s]'' to covered persons
are also subject to the CFPA, including its UDAAP prohibition.\10\
---------------------------------------------------------------------------
\9\ See 12 U.S.C. 5481(5), (6), (15)(A); 5531; 5536.
\10\ See 12 U.S.C. 5481(26); 5531; 5536. As the CFPB has
explained, discrimination may constitute an unfair act or practice
that violates the CFPA's UDAAP prohibition. See CFPB UDAAP Exam
Manual (updated Apr. 11, 2022).
---------------------------------------------------------------------------
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
[[Page 50558]]
service.'' \11\ The term ``service provider'' includes, but is not
limited to, a person that ``participates in designing, operating, or
maintaining the consumer financial product or service'' or ``processes
transactions relating to the consumer financial product or service.''
\12\ The term ``service provider,'' however, ``does not include a
person solely by virtue of such person offering or providing to a
covered person'' either ``a support service of a type provided to
businesses generally or a similar ministerial service,'' or ``time or
space for an advertisement for a consumer financial product or service
through print, newspaper, or electronic media.'' \13\
---------------------------------------------------------------------------
\11\ 12 U.S.C. 5481(26)(A).
\12\ 12 U.S.C. 5481(26)(B)(i), (ii). Of course, nothing in this
interpretive rule precludes a digital marketing provider from being
considered a covered person based on its acts and practices. Indeed,
by engaging in consumer data collection, tracking, analysis, and
maintenance activities, digital marketing providers may be covered
persons. See 12 U.S.C. 5481(15)(A)(ix).
\13\ 12 U.S.C. 5481(26)(B)(i), (ii).
---------------------------------------------------------------------------
Material Service
When digital marketing providers are materially involved in the
development of content strategy, they typically provide a material
service. Unlike most traditional media sources, digital marketing
providers engaged in ad targeting and delivery are not solely providing
airtime or physical space for ads. Rather, digital marketers commingle
the targeting and delivery of advertisements with the provision of
``time or space.''
A ``material'' service is a service that is significant or
important.\14\ When digital marketers identify or select prospective
customers and/or select or place content to affect consumer engagement,
including purchasing or adoption behavior, they are providing a
significant--and thus ``material''--service provided to covered
persons. In particular, identifying prospective customers and then
attempting to acquire those customers is a significant component of the
``offering'' of a consumer financial product or service, which is part
of the legally relevant test for determining that a firm is a ``covered
person.'' \15\
---------------------------------------------------------------------------
\14\ See Merriam Webster's Dictionary (online ed.) (defining
``material'' as ``having real importance or great consequences'');
Black's Law Dictionary (11th ed. online) (defining ``material'' as
``significant; essential'').
\15\ See 12 U.S.C. 5481(6).
---------------------------------------------------------------------------
Indeed, modern digital ad targeting and content delivery typically
consists of many functions--such as lead generation,\16\ customer
acquisition, or marketing analysis or strategy--that would often be
performed by covered persons. For example, a covered person may measure
the effectiveness of certain marketing efforts by calculating a
``customer acquisition rate.'' \17\ Similarly, a covered person's
marketing group may analyze where to purchase advertising across
multiple channels to maximize impact.\18\ The involvement in the
development of content strategy by digital marketing providers
increasingly resembles these functions and others often performed by
covered persons themselves (although the services are often carried out
in a more sophisticated way, based on the digital marketers' data and
technology). Accordingly, digital marketers that are materially
involved in the development of content strategy by identifying or
selecting prospective customers and/or selecting or placing content to
affect consumer engagement, including purchasing or adoption behavior,
typically provide a material service.
---------------------------------------------------------------------------
\16\ See, e.g., Complaint for Violations of the Consumer
Financial Protection Act of 2010, Consumer Fin. Prot. Bureau v. D
and D Marketing, Inc., No. 2:15-cv-9692 (filed Dec. 17, 2015),
https://files.consumerfinance.gov/f/201512_cfpb_complaint-v-d-and-d-marketing-inc-et-al.pdf (alleging that a lead aggregator is a
``service provider'' because it sold consumer loan applications as
``leads'' to payday and installment lenders who are ``covered
persons'').
\17\ See, e.g., Jacquelyn S. Thomas, Werner Reinartz, and V.
Kumar, ``Getting the Most out of All Your Customers,'' Harvard
Business Review (July-August 2004) (noting that ``most companies
still use the customer acquisition rate'').
\18\ See, e.g., Wes Nichols, ``Advertising Analytics 2.0,''
Harvard Business Review (March 2013) (noting that ``most businesses
still . . . measured how [their] TV, print, radio, and online ads
each functioned independently to drive sales'').
---------------------------------------------------------------------------
``Time or Space'' Exception
As noted above, the CFPA provides that the term service provider
``does not include a person solely by virtue of such person offering or
providing to a covered person'' either ``a support service of a type
provided to businesses generally or a similar ministerial service,'' or
``time or space for an advertisement for a consumer financial product
or service through print, newspaper, or electronic media.'' \19\ The
reference to ``solely'' providing ``time or space for an
advertisement'' means that digital marketers that provide additional
services beyond ``time or space''--i.e., beyond airtime or physical
space for the ad--do not qualify for the exception. Accordingly, when
digital marketers are materially involved in the development of content
strategy in addition to providing airtime or physical space, they fall
outside the exception for ``solely'' providing ``time or space.''
---------------------------------------------------------------------------
\19\ 12 U.S.C. 5481(26)(B)(i), (ii).
---------------------------------------------------------------------------
The ``service provider'' definition should be interpreted as a
cohesive whole.\20\ Thus, the ``time or space'' exception should be
interpreted alongside its inclusion with the exception for ``a support
service of a type provided to businesses generally or a similar
ministerial service.'' \21\ Firms that provide a ``ministerial''
service to financial institutions are not materially involved in the
marketing or distribution of the consumer financial product or service;
they are not typically involved in the identification or selection of
prospective customers, nor do they select or place content to affect
consumer engagement. For example, a firm that furnishes broadband
access to a financial institution is not involved in the strategic
marketing and distribution of the consumer financial product or service
and is generally not providing a material service.
---------------------------------------------------------------------------
\20\ See, e.g., Gustafson v. Alloyd Co., Inc., 513 U.S. 561, 569
(1995) (noting that ``the Act is to be interpreted as a symmetrical
and coherent regulatory scheme'').
\21\ 12 U.S.C. 5481(26)(B)(i), (ii).
---------------------------------------------------------------------------
Additionally, the ``time or space'' exception refers to
``electronic media'' within the phrase ``print, newspaper, or
electronic media.'' \22\ This phrasing--especially alongside the other
exemption for ``a support service of a type provided to businesses
generally or a similar ministerial service''--indicates that the ``time
or space'' exception should be interpreted to refer to the offering of
advertising in a manner similar to that was generally performed by
traditional media sources, such as ``print'' or ``newspaper.'' \23\ A
traditional media source typically provided ``time or space''--i.e.,
the airtime or physical space for the ad--with relatively little (i.e.,
largely ``ministerial'') involvement in the development of content
strategy.\24\
---------------------------------------------------------------------------
\22\ 12 U.S.C. 5481(26)(B)(i).
\23\ Cf. Gustafson, 513 U.S. at 576 (``[T]he term `written
communication' must be read in context to refer to writings that,
from a functional standpoint, are similar to the terms `notice,
circular, and advertisement.' '').
\24\ 12 U.S.C. 5481(26)(B)(i), (ii).
---------------------------------------------------------------------------
To be sure, some traditional media sources may have been involved
in the selection of the audience for or content of ads to some degree
(such as by allowing businesses to select advertising space in a
geographic-specific section of a newspaper to businesses operating in
that geographic area or putting advertisements for financial services
in the financial section of the newspaper). But traditional media
sources were typically not materially involved in the development of
content strategy; in the main, their function was solely to provide
``time or space'' by operating as
[[Page 50559]]
passive conduits of information provided by their customers.
Indeed, when digital marketers are materially involved in the
development of content strategy, the marketers perform functions that
would often traditionally be undertaken by the covered person itself,
rather than by a traditional media outlet. For example, as noted above,
a covered person's marketing group may analyze where or when to
purchase advertising across multiple channels to maximize impact.\25\
Of course, covered persons may sometimes engage third-party vendors for
these activities. For example, they may engage an advertising or
consulting firm to perform marketing analysis. But this would not
typically be a service that was performed by a traditional media
source, such as a newspaper or radio station. The enterprises or firms
providing these services may be ``service providers'' under the CFPA,
but a media source that merely provided airtime or physical space would
fall into the ``time or space'' exception and would not be a service
provider.
---------------------------------------------------------------------------
\25\ See, e.g., Wes Nichols, ``Advertising Analytics 2.0,''
Harvard Business Review (March 2013) (noting that ``most businesses
still . . . measured how [their] TV, print, radio, and online ads
each functioned independently to drive sales'').
---------------------------------------------------------------------------
Specific Circumstances
The conduct of digital marketers that provide services to covered
persons varies widely and, depending on the conduct, may or may not
fall within the ``time or space'' exception. Under the interpretation
of the definition of ``service provider'' described above, the role
played by the digital marketing provider--i.e., whether the digital
marketing provider is materially involved in the development of content
strategy by identifying or selecting prospective customers and/or
selecting or placing content to affect consumer engagement--will
determine whether the advertiser falls within the ``time or space''
exception. Increasingly, the role typically played by digital marketers
fall outside the exception and the digital marketers are typically
service providers under the CFPA.
In certain circumstances, the digital marketing provider is only
minimally involved in identifying or selecting prospective customers or
selecting or placing content to affect consumer engagement. For
instance, digital marketers may offer covered persons the ability to
choose to run an advertisement on a particular web page or application
of the covered person's choosing, with advertisements seen by any user
of that page or application. In these circumstances, the digital
marketer would typically fall within the ``time or space'' exception.
The digital marketer in this situation is ``solely'' providing ``time
or space'' for the ad, in the sense of airtime or physical space for
the ad, without commingling targeting or delivery of the
advertisements. Moreover, the digital marketer's conduct in these
circumstances is similar to a traditional media source (such as a
newspaper or radio station) that offered advertisements directed at a
particular market of the covered person's choosing, rather than a
function traditionally performed by a covered person itself.
Digital marketing providers may also target and deliver the
advertisements to users with certain characteristics (such as
demographics, geography, online behavior (such as particular keyword
searches), or offline behavior). In some circumstances, the covered
person may provide an audience of existing users and specify that
advertisements be provided to similar consumers. While the covered
person may specify certain parameters of the intended audience for a
specific consumer financial product or service, it is the digital
marketers' ad targeting and delivery algorithms that identify the
audience with the desired characteristics and determine whether and/or
when specific consumers see an advertisement.\26\
---------------------------------------------------------------------------
\26\ See, e.g., Charge of Discrimination at 5 ] 17, Facebook,
Inc., No. 01-18-0323-8 (Dep't of Hous. & Urban Dev. Mar. 28, 2019),
https://www.hud.gov/sites/dfiles/Main/documents/HUD_v_Facebook.pdf.
---------------------------------------------------------------------------
Digital marketing providers do not fall within the ``time or
space'' exception if they target and deliver advertisements to users
with certain characteristics, even if those characteristics are
specified by the covered person. In these circumstances, although the
covered person also plays a role, the digital marketer selects,
including through its algorithms and data, the specific audience that
sees the advertisement for the covered person's consumer financial
product or service. The selection of specific consumers to see specific
ads goes beyond solely selling airtime or physical space as performed
by traditional media sources such as newspapers or radio. When digital
marketers target and deliver advertisements to users with certain
characteristics, the digital marketer is materially involved in the
development of content strategy and is not covered by the ``time or
space'' exception.
Moreover, when digital marketers target and deliver advertisements
to users with certain characteristics, the selection of the audience
through algorithms and data is akin to a customer acquisition function
that would traditionally be performed in-house by a covered person (or
a vendor other than a traditional media source, such as a consulting
firm). Accordingly, digital marketers that target and deliver
advertisements to users with certain characteristics specified by the
covered person are typically service providers under the CFPA.
Similarly, digital marketing providers do not fall into the ``time
or space'' exception if a covered person identifies particular users by
name and the digital marketer targets and delivers the advertisements
to those users at specific times to increase or maximize engagement.
The provision of the service of analyzing when advertisements should
appear goes beyond ``solely'' selling airtime or physical space as
performed by traditional media sources such as newspapers or radio. To
be sure, a traditional media source might have provided some basic
information to firms about when to air particular advertisements, but
the business purchasing the ad was generally the entity that made the
decision about when and where to place the ad. Here, the use of
algorithms and business-specific data to determine when to display a
specific business' ads to specific consumers to affect consumer
engagement extends well beyond the activities performed by a
traditional media source.
There are also circumstances in which the digital marketing
provider plays an even more significant role in determining which
specific consumers see digital advertisements, such as by determining
or suggesting to the covered person which users are the most
appropriate audience for the covered person's advertisements (rather
than receiving such direction from the covered person). Digital
marketers may determine who is the appropriate audience to receive ads
based on, for instance, the content of the particular ad, the type of
businesses being advertised, the marketer's own knowledge of a
particular user's characteristics and behavior (including offline
behavior), the behavior of other users, and past user engagement with
similar types of ads.\27\
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\27\ See, e.g., Charge of Discrimination at 4 ] 16, Facebook,
Inc., No. 01-18-0323-8 (Dep't of Hous. & Urban Dev. Mar. 28, 2019),
https://www.hud.gov/sites/dfiles/Main/documents/HUD_v_Facebook.pdf.
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In circumstances such as these in which a digital marketing
provider plays an even more significant role in
[[Page 50560]]
determining which specific users see digital advertisements, such as by
determining or suggesting which users are the appropriate audience for
advertisements, the digital marketer does not fall within the ``time or
space'' exception and is typically a service provider under the CFPA.
Determining which users are the appropriate audience for a particular
covered person's advertisement is well beyond providing airtime or
physical space. To the contrary, determining the appropriate audience
is much more similar to the function traditionally performed by a
covered person's own customer acquisition or marketing group than by a
traditional media source. Indeed, identifying or selecting prospective
customers for a covered person's business is similar to the function of
a ``lead generator'' that would be considered a service provider under
the CFPA. Accordingly, digital marketers that, for example, determine
or suggest which users are the appropriate audience for advertisements
are materially involved in the development of content strategy, do not
fall under the ``time or space'' exception, and are typically service
providers under the CFPA.
III. Regulatory Matters
This is an interpretive rule issued under the Bureau's authority to
interpret the CFPA, including under section 1022(b)(1) of the CFPA,
which authorizes guidance as may be necessary or appropriate to enable
the Bureau to administer and carry out the purposes and objectives of
Federal consumer financial laws, such as the CFPA.\28\
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\28\ 12 U.S.C. 5512(b)(1).
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As an interpretive rule, this rule is exempt from the notice-and-
comment rulemaking requirements of the Administrative Procedure
Act.\29\ Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis.\30\ The Bureau also has determined
that this interpretive rule does not impose any new or revise any
existing recordkeeping, reporting, or disclosure requirements on
covered entities or members of the public that would be collections of
information requiring approval by the Office of Management and Budget
under the Paperwork Reduction Act.\31\
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\29\ 5 U.S.C. 553(b).
\30\ 5 U.S.C. 603(a), 604(a).
\31\ 44 U.S.C. 3501-3521.
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Pursuant to the Congressional Review Act,\32\ the Bureau will
submit a report containing this interpretive rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to the rule's
published effective date. The Office of Information and Regulatory
Affairs has designated this interpretive rule as not a ``major rule''
as defined by 5 U.S.C. 804(2).
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\32\ 5 U.S.C. 801 et seq.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-17699 Filed 8-16-22; 8:45 am]
BILLING CODE 4810-AM-P