Using Social Media in Debt Collections

Association of Business Training
October 18, 2013 — 809 views  

Social Media has emerged as a major cultural force in today’s world. Already, many consumers have access to the internet. Many of them use social media for all types of purposes. These consumers can be tapped by businesses who wish to grow on the internet.

There has been an increase in use of social media by debt collectors. If used in the correct manner, social media can prove to be an effective tool in the hands of debt collectors. Despite growing debate on whether or not debt collectors should access personal information of debtors from such networking sites, many debt collectors have already started using Facebook and Twitter to grow their businesses.

In the United Kingdom

In the United Kingdom, the debt collectors are regulated by the OFT, the Office of Fair Trade. Recently they have updated their debt collection practices and guidelines. These guidelines state that the debt collectors shall not make use of harassment; they have also been forbidden from contacting debtors too frequently.

Debt collectors have been asked to self-regulate their usage of social media, because social media constitutes a private sphere. The privacy of debtors' communication with their friends and family should not be compromised by debt collectors.

In the United States

In the U.S., some states have made regulations relating to debt collection and social media, while in other states it is still a gray area. At the federal level, these issues are regulated by the Federal Trade Commission (FTC) and the consumer Financial Protection Bureau (CFPB). Another consumer act that deals with this includes the Fair Credit Reporting Act (FCRA).

Key Social Media Trends in Debt Collection

The key social media networks that debt collectors are targeting are Facebook, Twitter, and LinkedIn. Debt collectors are using Facebook in particular to reach out to the debtors in such a way that their privacy is compromised. This is because the Facebook conversations of a person can be viewed by others on the person's friend-list too. Debt collectors are also reaching out to sites like LinkedIn, because they provide the complete career history of a debtor. It has become a popular tool through which collection agencies hound debtors who claim unemployment as the reason for non-payment of outstanding debts.

Legal Considerations

Because social media is a new technology, use of social media for debt collections is a legal gray area. The main federal agencies that deal with this in the U.S. are the Federal Trade Commission and the Consumer Financial Protection Bureau. In many cases, courts have held that multiple, various uses of social media towards the same debtor over a short period of time constitutes as harassment.

Some courts have also held that a debtor can decline a Facebook friend request if it comes from a debt collector. Melanie Beacham, a Florida resident who had fallen behind on her car loans sued a debt collection agency after it started sending Facebook messages to her and her friends. The lawsuit was decided in her favor.

 Debt collectors should also be mindful of the legal ramifications of their use of social media tools to track and contact defaulting debtors. Since legal guidelines are yet to catch up with this advancement in communication technology, they must practice their own discretion while using such services.

Association of Business Training