When Judge W. Douglas Baird ordered the collection agency MarkOne Financial LLC to stop contacting Melanie Beacham and her family and friends on Facebook, it quickly raised questions about the role courts will play in governing the use of social networks by collectors.
Beacham filed suit in 2010 against MarkOne, which sent her messages on Facebook to call concerning a delinquent car loan. MarkOne also sent messages to Beacham's family via Facebook asking that they direct her to call the agency. Both acts violated Florida's consumer protection law.
While Baird's decision in March was based on Florida law, it raises concerns that the courts may have to take a more active role in governing the use of social media by collection agencies to contact debtors since the Fair Debt Collection Practices Act does not address social media.
Without clear FDCPA guidelines, collectors can find themselves in a gray area when it comes to using social media. "There are general guidelines in the FDCPA about unfair and deceptive practices, but none specifically for online communications or social media," said Susan Grant, director of consumer protection for the Consumer Federation of America. "It may be time for guidelines on how social media can be used by collectors to be put in place by the Federal Trade Commission."
One concern among collection industry executives is that without clear guidelines from a regulatory body such as the FTC, which is responsible for enforcing the FDCPA, or the Consumer Financial Protection Bureau, the courts may end up having a greater influence over rules governing the use of social media by collectors.
"Judge Baird's ruling puts collectors on notice that they can't use Facebook to communicate with debtors or their family and friends and it is likely to have a profound effect on the outcome of similar cases around the country," said Beacham's attorney, Billy Howard, head of the consumer protection department for the Orlando, Fla., law firm Morgan & Morgan.
Howard filed a second suit against MarkOne for using Facebook to contact another debtor. "I am seeing a growing trend of more collectors using Facebook to contact debtors and a lot more lawsuits will come of it."
Howard was part of a panel discussion on the topic organized by the FTC last month. MarkOne did not respond to interview requests.
One potential drawback to having policy determined by the courts is that rulings may vary from judge to judge. "The risk of relying on the courts to set policy is that the decisions can be all over the map and that can lead to a lot of confusion, which doesn't help," Grant said.
Another concern facing the industry if the FTC does not set down guidelines is that state legislatures may take the lead.
"Massachusetts is looking at revising its debt collection statute to reflect the use of new technologies by debt collectors," Grant said. "States are quicker to act than Congress and if they start to take action, it can result in a complex maze of new laws for the collection industry to navigate."
While the FTC said it has no immediate plans to revise FDCPA regulations to reflect the use of social media, it is quick to add that the consumer protections provided by the law when it comes to communication with a debtor do apply to social media.
"Regardless of the communication method, the consumer protections in the FDCPA do apply to the use of social media," said Bevin Murphy, an FTC attorney in the division of financial practices.
ACA International supports that position. "There is enough guidance in the FDCPA to tell collectors they can't use social media to harass debtors or initiate communication without proper disclosure," the trade group for collectors said.
Still, collection executives would at the very least like to see some level of guidance from a federal regulatory body.
"Right now it is tough to envision that a consumer would tell a debt collector they prefer to communicate through a social network, but that may change in a few years and there really needs to be regulatory guidelines now," said Vytas Kisielius, the chief executive of Collections Marketing Center Inc. of Wilmington, Del. "If the FTC were to put down some guidelines, the industry would know how to comply going forward."
