Can Collection Agencies Use Social Media to Collect Unpaid Debts?

(Image by Spencer E. Holtaway, via Flickr.com)

For all the good the explosion of social media has lead to, it’s also had some unintended consequences. Sharing pictures, opinions, and links with your friends, followers and connections is fine—unless someone else is watching with ulterior motives. For example, some debt collectors have begun using social media as a tool to assist with their collection efforts. How does that sit with you?

Before we get started let’s get something clear, I’m not anti-collection agency. In fact, I’ve served as an expert witness a number of times for some of this country’s largest debt buyers and collection agencies. They’ve got a horrible reputation primarily because of the bad apples that always spoil the lot.

I am, however, anti-abusive collection behavior. I’m clearly not the only one who feels this way. Abusive collection behavior is illegal under the federal Fair Debt Collection Practices Act (FDCPA) and any number of state level equivalent statutes. The million dollar question: Is using social media to collect debts illegal?

There’s nothing in the FDCPA that outlaws using social media. There is, however, language that suggests the primary reason that law exists is to “…protect consumers against debt collection abuses.” Abuse is abuse, whether it’s on Facebook or over the telephone. Conversely, non-abusive actions can occur via Facebook, or any other social media venue, just like it can occur on the telephone.

So the answer to the question posed in the title is, yes. Debt collectors can use social media as long as they don’t abuse or harass debtors. Has collector abuse occurred via social media? The answer is clearly yes, it has.

While I’m the first one to admit I’m no social media expert, Facebook and LinkedIn seem to be the most logical way for debt collections to use social media. Many users blindly accept friend requests and invitations even if they have no clue who it’s coming from. This gives covert collectors access to valuable information about the debtor.

Normally when a collector contacts a debtor by telephone or letter they must disclose that they’re with a collection agency and any information gathered could be used to pursue their collection efforts. But, this is only when they communicate with the debtor. Collection agencies do not have to provide this disclosure if they’re simply watching you on social media venues, just like they don’t have to provide this disclosure if they’re looking at your credit report card, which incidentally is perfectly legal.

One of the primary challenges in the debt collection industry is simply finding the debtor so they can ask them to pay the account. And what do Facebook and LinkedIn provide?  They provide a method to privately contact the consumer via the messaging functions on those sites.

The fact that it’s private is important because disclosing the debt to a third party is illegal under the FDCPA. So, a debt collector can’t make a comment to one of your Facebook posts saying something like, “Hey Suze, why don’t you pay your defaulted Amex bill?”  They can, however, send you a private message with a more professionally crafted equivalent.

Have debt collectors been sued for abusing the social media avenue? You bet they have. In fact, lawsuits filed because of alleged violations of the various debt collection laws was at an all time high in 2011 and we’re on pace to match it in 2012.

One of the issues with using social media is that even though you have an approved connection with the real debtor, you don’t know whose eyes are seeing the message. It’s like leaving a message on an answering machine at someone’s home. There’s no guarantee that the actual debtor is going to be the one who picks up the message. I have no doubt that conundrum will play out in court, eventually.

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John Ulzheimer, Credit ExpertJohn Ulzheimer is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO and Equifax, John is the only recognized credit expert who actually comes from the credit industry. He is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. Follow him on Twitter »

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Published March 20, 2012 Updated: April 15, 2016
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