Disclosures on a Mobile Device: Key Take-Aways from Limited Federal Guidance

Mobile banking, where a consumer uses a mobile device to connect with their financial institution for a variety of traditional banking services, is on the cusp of widespread adoption by consumers in the United States. In fact, according to a Federal Reserve Board study, 48% of Americans reported using a mobile device for mobile banking services in 2012. While this widespread adoption presents substantial opportunities and benefits for both consumers and financial institutions, it also raises critical issues for banks and other industry participants to navigate.

One such issue is how to ensure a consumer receives adequate legal disclosures on a mobile device. Making this more difficult is the fact that, as financial institutions struggle to develop ways to translate disclosure and response requirements to the mobile environment, federal banking regulators have been slow to offer their own guidance to assist this process. For example, in 2012 the Federal Deposit Insurance Corporation (“FDIC”) published guidance entitled “Mobile Payments: An Evolving Landscape,” wherein the FDIC noted that mobile payments providers must adopt creative solutions to comply with federal disclosure requirements, but offered no guidance into what those creative solutions may look like.

However, two other consumer-focused agencies have provided at least some guidance that financial institutions may look to for help in creating solutions to the mobile disclosure issue. First, in its final rule concerning international remittances, the Consumer Financial Protection Bureau (“CFPB”) demonstrated a flexible approach to the mobile disclosure rule. Second, the Federal Trade Commission (“FTC”) has published its own guidance for making effective disclosures in the digital environment. This article summarizes the key points financial institutions may take from the guidance provided by each agency.

The CFPB’s remittance transfer rule generally requires, among other things, the provision of certain disclosures to consumers transferring money internationally. In its final rule, the CFPB, based on comments it received after promulgating its initial proposed rulemaking, specifically addressed the provision of these disclosures on a mobile device. Specifically, in response to the concerns raised by industry participants, the CFPB stated that the final rule’s disclosure requirements with regard to grouping, proximity, font size, and segregation would not be required for disclosures made through a mobile application. The CFPB went on to state that what it expects for mobile disclosures is that the required information be presented in a logical sequence, that it be clear and conspicuous, and that it be in equal prominence to one another. From this, financial institutions may glean that the CFPB is adopting a generally flexible approach to the provision of mobile disclosures, and that ensuring such disclosures are clear and conspicuous remains the most important factor.

The FTC’s guidance offers more specifics that financial institutions may use in crafting their mobile disclosure policies. The key points financial institution’s should take away from such guidance include the following:

• Required disclosures must be clear and conspicuous.

To ensure a disclosure is clear and conspicuous:

• • Place the disclosure as close as possible to the triggering claim.
  • Take account of the various devices and platforms consumers may use to view advertising and any corresponding disclosure.
  • Incorporate the disclosure into the claim whenever possible. If not possible, make the disclosure clearly and conspicuously on the page to which the claim links.
• When using a hyperlink:◦
  • make the link obvious;
  • label the hyperlink appropriately to convey the importance, nature, and relevance of the information it leads;
  • use hyperlink styles consistently, so consumers know when a link is available;
  • place the hyperlink as close as possible to the relevant information it qualifies and make it noticeable;
  • take consumers directly to the disclosure on the click-through page;
  • assess the effectiveness of the hyperlink by monitoring click-through rates and other information about consumer use and make changes accordingly.
• Preferably, design claims so that “scrolling” is not necessary in order to find a disclosure. When scrolling is necessary, use text or visual cues to encourage consumers to scroll to view the disclosure.
• Keep abreast of empirical research about where consumers do and do not look on a screen.
• Recognize and respond to any technological limitations or unique characteristics of a communication method when making disclosures.
• Review the entire claim to assess whether the disclosure is effective in light of other elements — text, graphics, hyperlinks, or sound — that might distract consumers’ attention from the disclosure.
• Display visual disclosures for a duration sufficient for consumers to notice, read, and understand them.
• Use plain language and syntax so that consumers understand the disclosures.

In summary, banking regulators have generally been slow to offer detailed guidance regarding the provision of required disclosures on a mobile device. Financial institutions may, however, look to the CFPB’s remittance transfer rule, as well as FTC guidance, in developing their methods and processes for making mobile disclosures.

Eli A. Rosenberg