Social networking on the Internet is all the rage. Consumers today think nothing about posting personal information online for all to see.
Consumers use Facebook to share news of jobs, relocations, major purchases, vacations and post photos. Professionals use LinkedIn to job hunt, build professional networks and offer contact information to potential employers. Consumers will even broadcast Twitter Tweets to notify friends where they will be on any given day.
With the wide spread 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 even use the medium to make direct contact with a debtor or thru family and friends.
“Being online creates social capital that consumers can leverage,” says Christine Schiwietz, a sociology professor at Georgetown University. “While there is a certain status to that, the downside is that consumers can make themselves too findable and they don’t always understand what affect that can have on their lives.”
Schiwietz was part of a recent panel discussion organized by the Federal Trade Commission regarding the use of social media in collections. The panel, which included, consumer attorneys, collection industry executives and consumer protection agencies, addressed whether it is acceptable under Fair Debt Collection Practices Act (FDCPA) guidelines for collectors to use such sites for information gathering, skip tracing and communicating with debtors.
It’s unlikely that the framers of the FDCPA never envisioned the rise of social media as a communications and research tool back in the late 1970s. Fast forward to 2011: changes in technology and social behavior have the collection industry and the FTC wrestling with how to manage the use of social networks within the guidelines of the FDCPA.
The consensus of the panel is that there is nothing wrong with collectors browsing social media sites to learn more about a debtor and their assets as long as the information is displayed publicly.
“It comes down to an expectation of privacy,” said John Bedard, principal of Duluth, Ga.-based Bedard Law Group Plc.
“Consumers have no more an expectation of privacy when they put their personal information on public Web sites than when they take that same information and publish it on an interstate highway bill board,” 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.”
While panelists agreed that information gathered about debtors from social networking sites must be available to the public, they were quick to add that consumers are naïve when it comes to privacy expectations.
“Every consumer with a public profile on the internet leaves a digital footprint on the Internet that can be scanned by web aggregators,” Schiwietz said during the panel discussion. “These aggregators scour the Internet for personal information about someone for a fee.”
Whether privacy on the Internet is a myth or not, many consumers feel that information publicly posted online and appropriated by collectors invokes shades of Big Brother.
“There is a creepiness factor, but consumers are not necessarily using good sense when it comes to protecting personal information they post on the Internet,” said Vytas Kisielius, CEO of Wilmington, Del.-based Collections Marketing Center Inc.
Kisielius elaborated on his comments after the panel discussion.
“Social media is not private. It’s naïve for consumers to think that debt collectors won’t use their public information from a social networking site to determine a collections strategy. That said, gathering information that can influence a collection strategy is different from browsing social networking sites to contact a debtor. Debt collectors have an obligation to do their homework to prevent cases of mistaken identity,” he said.
Attorneys on the panel said the biggest risk of using social networks for skip tracing is a case of mistaken identity.
“I’ve seen enough bad skip tracing to know that the process can be fraught with liability problems,” said Dan Edelman, principal, Edelman Combs, Latturner & Goodwin LLC, a Chicago-based law firm, who was a panelist. “Even with a less common name, debt collectors can wind up identifying the wrong person as the debtor and initiating action.”
Edelman says he has seen cases where after a skip trace the collection agency or collection 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,” said Edelman. “Social media may be a form of skip tracing, but as with any form of skip tracing, debt collectors have got to be careful to avoid incorrect matches.”
Although panelists agreed that using social media for skip tracing and gathering public information about a debtor is acceptable, they were divided about using social media to contact debtors or their friends and family.
At issue are disclosure guidelines for collectors under the FDCPA. Collectors asking to friend a debtor on Facebook in order to communicate directly with them 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
“I’ve had cases where consumers were being harassed by debt collectors that posted messages on the debtor’s Facebook wall about their debt,” said Edelman. “That level of communication is not permitted, because someone other than the debtor will see it.”
Several panelists likened such tactics to sending a debtor a post card 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 Washington D.C.-based Consumer Federation of America, who participated in the panel. “Post cards are not allowed under the FDCPA and posting on a wall is like a post card.”
Just how widespread is the use of social media by collectors to contact debtors without proper disclosure is unclear? Many panelists said abuses were the exception.
Billy Howard, head of the Consumer Protection Department for Morgan & Morgan, an Orlando, Fla.-based 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,” said Howard. “This kind of communication scares people and they want it to stop.”
Several panelists argued that it’s unlikely any consumer would tell a collector they prefer to be contacted through a social media channel, which they consider to be a private network of friends and family.
“Even with the way consumers are embracing social media as a communications tool, that’s unlikely to happen soon,” said Schiwietz.
Going forward panelists agreed that clarification is needed about how collectors can use social media without running afoul of FDCPA guidelines.
“Right now, there is a lack of clarity on the subject from a regulatory standpoint,” said Kisielius. “If guidelines can be put down about how the industry should comply with the FDCPA when it comes to social media that would help. In the meantime, it’s best for collectors to limit communication through this channel to avoid violations.”
To comment, contact editor Darren Waggoner at 815.463.9008 or via e-mail at: darren.waggoner@sourcemedia.com.
