Monday, April 20, 2009

Bank Lawyer's Social Media Checklist

On April 17th, I published Social Media and Bank Compliance Requirements, where I provided, thanks to the ABA Banking Journal, a list of regulatory compliance-related items that should be considered by banks that are thinking of or have already implemented some form of social media within their organization.

In this post I leverage (and paraphrase) off of the work of Richard Best as contained in NZLawyer article titled, "Social media and legal code: A checklist of issues."

Mr. Best highlighted four distinct areas that require legal consideration:

  • Upfront governance and assessment;
  • Site design and set-up;
  • Content creation, moderation, and use; and,
  • Content distribution.

Upfront Governance and Assessment

Questions that should be addressed :

  1. Does the bank have a clear objective/rationale for creating a online presence with social media capability?
  2. Has management and the board considered the business case for the development of a social media component? Is the presentation and board decision clearly documented in the board minutes?
  3. Has bank management formed a steering committee with an appropriate mix of skills been set up to oversee the development and implementation of the site’s planning, policies, and procedures? At a minimum, members of this team should have a background in the nuances related to social media and Web 2.0.
  4. Has a review and approval process been developed relative to the process? Who has the final say? Executive management? Board of Directors?
  5. Has the bank developed the appropriate policies and procedures that address issues such as site usage policy, staff contribution guidelines, employee training (e.g., who is authorized) and ongoing assessment ?
  6. Has the bank revised its record retention policy and procedures to ensure that electronic records created comply with applicable disclosure and security requirements?

Site Design and Set-Up

Questions that should be addressed :

  1. Has the bank chosen and researched the availablity of the Web site name and domain name name?
  2. Has the bank's Compliance or other Department completed a comprehensive risk assessment and have the results of the risk assessment been presented to executive management and the board of directors?
  3. Has the bank determined whether the site be designed in-house or outsourced? If outsourced, has the bank completed an appropriate vendor assessment according to the bank's vendor management policy?

Content Creation, Moderation, and Use

Questions that should be addressed:

  1. Has the bank's legal department developed a terms of use policy that complies with applicable laws, rules and regulations. Refer to Social Media, Banking and the Communications Decency Act post. Considerations should include:
  • Registration obligations;
  • Copyright and licensing disclosures;
  • Warranties on the part of site users contributing third-party copyright content that they have the right to use such material;
  • Indemnification of the bank against loss;
  • Ownership or licensing of users’ contributions;
  • Unacceptable use and the bank’s right to remove offending material;
  • Cooperation with authorities in the event that material breaching other parties’ rights, or that is otherwise unlawful, is posted to the site;
  • Moderation and banning of abusive commentators;
  • Disclaimers of liability (to the extent appropriate), and
  • Right to amend the terms of use.

Content Distribution

Questions that should be addressed:

  1. If the bank will be resyndicating content from other sites on the bank’s site (e.g., through RSS feeds available on other sites), the bank should ensure that the bank is licensed to resyndicate that content.

Mr. Best does a great job of noting key issues that must be considered. While this list is not exhaustive, consideration of each point noted here will go a very long way in protecting the bank from a legal perspective.

I recommend that bankers download a copy of my Community Banker's Guide to Social Network Marketing to educate management and the board on what it takes to develop and implement a sound social media strategy. The Guide can be downloaded at Before a bank can reasonably approve such a measure, decision makers must be knowledgable. The Guide goes a long way in providing an education on social media and social networks.

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