JPMorgan Chase’s recent activity on Twitter provides an example of the need for financial institutions to use caution when using social media.
The day before the company was scheduled to host an online discussion with executive Jimmy Lee, the JPMorgan Twitter account suggested that people should submit questions with the hashtag “#AskJPM.”
Although the bank received plenty of questions (and comments), they were likely not what JPMorgan had in mind.
As reported in the American Banker and other media, questions ranged from “Is your ‘Chief Compliance Officer’ alive? Has anyone checked to see if he’s in his office? #AskJPM” to a request for the bank to self-identify as one of the characters on Sex and the City (the questioner guessed the bank was likely a Samantha) to “What’s your favorite kind of whale? #AskJPM.”
One Twitter user asked, “Can I have my house back? #AskJPM” while the account for Occupy Wall Street shared the hashtag, writing “Ever wish you could give JPMorgan/Chase a piece of your mind? Check out the hashtag #AskJPM right now.”
Eventually, the company called for a truce. JPMorgan canceled the scheduled discussion and tweeted “#Badidea! Back to the drawing board.” During the roughly six hours before that tweet, the bank endured more than 6,000 responses to its request for questions; even after the event was canceled, the hashtag remained popular, with more than 24,000 posts.
Social media guidance for financial institutions may have benefited JPMorgan. In January, the Federal Financial Institutions Examination Council released proposed guidance for banks as they attempt to engage with customers on sites like Facebook, Twitter and YouTube.
Ably predicting the antagonism directed at JPMorgan via the Twitterverse, the proposed guidance noted that “the participatory nature of social media can expose a financial institution to reputational risks that may occur when users post critical or inaccurate statements.”
In addition to reputational risks such as JPMorgan’s embarrassing gaffe, the FFIEC “Social Media: Consumer Compliance Risk Management Guidance” explained that social media presents legal and operational risks for banks.
For example, banks must comply with Regulation Z’s advertising limits as well as avoid using illegal criteria when making lending decisions based on information found in social media (such as race or religion) in violation of the Equal Credit Opportunity Act.
The SEC in a report issued in April has also weighed in on companies’ use of social media, confirming that Twitter and similar social media channels can be use used to announce key information regarding a company, so long as investors have been informed regarding which social media will be used to disseminate such information.
Why it matters: JPMorgan’s efforts to start a conversation with customers backfired in a big way. Banks and other financial institutions should use caution when engaging on social media sites such as Twitter and consult the FFIEC’s and SEC’s guidance. Given the current antibank sentiment from many consumers and the record-breaking $13 billion settlement with the Justice Department over JPMorgan’s activities during the mortgage crisis, an uncensored exchange on Twitter was clearly not the best idea for the company.