When Judge W. Douglas Baird ordered collection agency Mark One 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 Mark One, which sent her messages on Facebook to call them concerning a delinquent car loan. Mark One also sent messages to Beacham’s family via Facebook asking 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 (FDCPA) does not specifically address social media.
Without clear FDCPA guidelines, collectors can find themselves in a gray area when it comes using social media.
“There are general guidelines in the FDCPA about unfair and deceptive practices, but none specifically for online communications or social media,” says Susan Grant, director of Consumer Protection for Washington D.C.-based 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.”
The topic was a panel discussion topic during a workshop organized last month by the Federal Trade Commission (
Beacham’s attorney, Billy Howard, head of the Consumer Protection Department for Orlando, Fla.-based law firm Morgan & Morgan and Meacham’s attorney, believes that may well be the case.
“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,” says Howard, who adds he filed a second suit against Mark One 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 organized by the FTC last month to discuss the use of social media and debt collections. Mark One 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,” says Grant.
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,” says Grant. “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 says it has no immediate plans to revise the FDCPA to reflect the use of social media, it is quick to add 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,” says 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,” says an ACA spokesperson.
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,” says Vytas Kisielius, CEO of Wilmington, Del.-based Collections Marketing Center Inc. “If the FTC were to put down some guidelines the industry would know how to comply going forward.”
Once agencies know how to comply with the FDCPA when including the use of social media in their collection strategies, the risk of further lawsuits, which can influence federal and state legislators, is expected to diminish.
“The Florida ruling has provided some guidance on what is an unacceptable use of social media, but the FDCPA does need to be modernized to reflect the technology people use to communicate today,” says the ACA spokesperson “The more gray areas there are around the law, the more likely there will be legal challenges to eliminate the gray and social media is a gray area right now for the industry.”
Rather than rush to implement guidelines for use of social media, consumer attorney Dan Edelman, principal of Chicago-based Edelman Combs, Latturner & Goodwin LLC recommends regulators give the matter deep thought before taking action.
“There are always going to be a handful of people that abuse technology or the rules, but the goal is to set forth guidelines that clearly spell out what is and is not permissible, the liability issues involved, and that not only prevent abuses, but prevent those who abuse the technology from doing so again.”
