Consumer Financial Protection Bureau Releases Circular on Affiliate Comparison Sites

Affiliate marketers in the financial services industry face a new landscape following the Consumer Financial Protection Bureau (CFPB) issuing a new circular of guidance on “preferencing and steering practices” by digital intermediaries or affiliates.

The guidance, outlined in Consumer Financial Protection Circular 2024-01, clarifies that prioritising financial products based on payments received by comparison sites, rather than on what’s best for consumers, is considered illegal.

This practice, known as “steering,” violates the CFPB’s Abusive Acts or Practices rule.

While the ruling doesn’t ban affiliate marketing entirely, it significantly impacts how comparison sites can utilise their paid partnerships.

Could This Be the End of Curated Results?

Prior to this ruling, comparison sites often used affiliate marketing to highlight specific products, sometimes burying better options for consumers deeper within their results. This “curated” approach steered consumers towards products that were more profitable for the comparison site, not necessarily the best fit for the individual’s needs.

The CFPB’s new guidance demands a shift towards a more neutral presentation. This could effectively change the internet landscape for financial product searches, potentially turning comparison sites into something akin to an online yellow pages.

Key takeaways for affiliate marketers:

• Focus on objectivity: Comparison sites can no longer prioritise products based on the amount of revenue generated through affiliate partnerships.
• Transparency is key: Clear separation between paid advertisements and objective comparisons is crucial. All available options, regardless of affiliate relationships, must be presented fairly.
• Compliance is essential: Failure to comply with the CFPB’s guidance could lead to enforcement actions, including fines and other penalties.

Experts believe the ruling will:

• Increase scrutiny on affiliate marketing practices: Regulatory bodies are likely to pay closer attention to how comparison sites structure their partnerships and represent financial products.
• Shift focus towards value-based partnerships: Collaboration based on product quality and relevance to consumer needs might become more prominent.
• Lead to innovation: Affiliate marketers may need to develop new strategies and metrics to demonstrate the value they bring to both consumers and comparison sites.

The full impact of the CFPB’s guidance is yet to be seen, but it undoubtedly represents a significant change for affiliate marketers in the financial services sector.

Adapting to the new regulations while maintaining consumer trust and generating revenue will be the key challenge for businesses in this evolving landscape. Read the full circular and additional analysis on the circular that was released last week.