On March 19, 2019, Facebook announced the latest changes to its policies in response to regulatory concerns regarding its advertising platform. This platform allows advertisers to screen for prospective customers based on their demographics, interests and other attributes.
Such targeting offers businesses the opportunity to enhance the performance of their advertising campaigns by focusing on the attributes that are most associated with customer conversions and profitability. However, for financial institutions, property managers and other businesses that are subject to credit and housing regulations, these screening options allowed advertisers to effectively exclude protected classes from credit opportunities.
Facebook’s latest advertising policy changes, as a response to regulatory complaints, reduces options available to credit and other groups of advertisers. These advertisers will no longer be able to target on the basis of zip code, gender and age and will have a smaller set of categories available for screening prospects.
Lead generation platforms such as Facebook, Google Ads, LendingTree and Zillow as well as targeted direct mail campaigns offer the ability to screen for very specific sub-groups of prospective applicants. In our work, with weak controls such marketing campaigns could manifest as lending disparities and increase Fair Lending risk due to redlining (i.e., the avoidance of entire communities or groups of consumers on a prohibited basis). For example, targeting on the basis of zip codes, property values or credit scores could result in fewer applications from majority-minority neighborhoods. Fair Lending issues can arise if