With the widespread use of social networking sites it's no surprise that collection agencies are browsing them to gather information on debtors and their assets.
Collectors sometimes use the medium to make direct contact with a debtor or through family and friends. The practice has the industry and regulators wrestling with how to manage the use of social networks within the guidelines of the Fair Debt Collection Practices Act, a law written in the 1970s, well before the advent of Facebook or Twitter.
Billy Howard, head of the consumer protection department for Morgan & Morgan, an Orlando, Fla., law firm, said he has seen more than 20 cases this year of consumers being contacted by collectors via Facebook. "Some were clearly a violation of harassment laws; some were close to it," Howard said during a recent panel discussion organized by the Federal Trade Commission. "This kind of communication scares people and they want it to stop."
The consensus among panelists was that there is nothing wrong with collectors browsing social media sites simply to learn more about a debtor as long as the information is displayed publicly. "It comes down to an expectation of privacy," said John Bedard, principal of Bedard Law Group PLC in Duluth, Ga.
"Consumers have no more an expectation of privacy when they put their personal information on public websites than when they take that same information and publish it on an interstate highway billboard," he said. "I think it's wrong to condemn debt collectors who view that information and use that information when they drive by it on the Internet superhighway."
Attorneys on the panel said the biggest risk in using social networks for skip tracing is mistaken identity.
"I've seen enough bad skip tracing to know that the process can be fraught with liability problems," said Dan Edelman, principal at Edelman, Combs, Latturner & Goodwin LLC, a Chicago law firm. "Even with a less common name, debt collectors can wind up identifying the wrong person as the debtor and initiating action."
Edelman said he has seen cases where after a skip trace the collection agency or attorney sends a letter to the wrong person, who then informs the agency they are not the debtor, but the agency or attorney still pursues recovery. "It's a violation of the FDCPA to send a letter to someone saying they owe money when they don't, because that is a false statement," Edelman said. "As with any form of skip tracing, debt collectors have got to be careful to avoid incorrect matches."
Panelists were divided about the appropriateness of using social media to contact debtors or their friends and family. Collectors who try to "friend" a debtor on Facebook without disclosing who they are; or who contact friends in the debtor's social media network without disclosing who they are; or who post a comment about the debtor on their Facebook wall were all considered taboo by the panel.
Several panelists likened such tactics to sending a debtor a postcard detailing information about their unpaid balance. "Publicly posting information about a debt on a consumer's Facebook wall seems intended to pressure the debtor as opposed to initiate communication with them," said Susan Grant, director of consumer protection for the Consumer Federation of America.