Social Media Primer for Debt Collectors

Before discussing the pros and cons regarding the use of social media in debt collecting it is important to provide a primer on social media.  This post provides a brief history of social media, the types of social media in use, the reasons why social media has become so popular and the role that social media can play in the debt collection process.

Social media was born from the combination of the Internet and social marketing efforts that resulted in a form of marketing that utilizes Internet-based tools (the “media” part) for sharing and discussing information (the “social” part). At its most fundamental level, social media turns Internet users into creators of content (“user generated content”) through various forms of interaction.  User generated content includes, but is not limited to, user profiles, comments, videos, blog posts, wiki entries, photos, online reviews and location-based information.  All this information is posted on social media platforms and, with the exception of “private” information, is generally available for the benefit of the Internet community.

The ability of ordinary Internet users to create and consume customized and highly relevant content has made social media the Internet’s rock star.  The effect that the democratization of Internet content has had and will continue to have on culture and society should not be ignored.  This point was not lost on Robert Scoble and Shel Israel when they stated in their book, Naked Conversations (John Wiley & Sons, 2006), that “culture cannot be overestimated when discussing social media.”

Social media has transformed both the personal habits of users as well as the workplaces in which these individuals operate.  Studies have found that social media has significantly altered the manner in which people communicate with each other.  Social media affects how individuals make decisions, socialize, learn, entertain themselves, and do their shopping.  Social media has also created an environment that values honest and transparent communication.  Mashable.com’s Adam Ostrow stated in a March 2009 blog post ("Social Networking More Popular Than Email") that “by the end of 2008, social networking had overtaken email in terms of worldwide reach.”

On social media platforms individual privacy has taken a back seat to more intimate sharing of personal information among friends, family - and at times, perfect strangers.  According to Sarah Mitchell in an April 2011 blog post on SocialMediaToday.com (“Social Media and Your Privacy”), “social media is designed to encourage people to abandon privacy.  We connect with people we don’t know and we do it often.”

Privacy and consumer advocates claim that the use of social media by debt collectors is an invasion of privacy and a form of harassment.  These opponents of social media usage claim that consumers are not sufficiently sophisticated to understand how to appropriately protect themselves and as such, debt collectors should not be permitted to use social media platforms in the debt collection process.

However, to the extent that the information posted by a consumer is “publicly available,” proponents of social media usage as well as developing case law, support the notion that that the use of this information is permissible and does not violate privacy statutes as there should be no expectation of privacy regarding publicly displayed information.

Regarding harassment, supporters of social media as well as the Federal Trade Commission argue that the FDCPA has made very clear those actions that violate the law and result in harassment.  Therefore, as long as collectors abide by the letter and intent of the FDCPA, their use of social media is a permissible practice.

There are many types of social media sites.  Blogger Linda Fulkerson classifies social media sites on her blog, On Blogging Well (www.OnBloggingWell.com), into 23 different varieties.

·       Social Networking Sites:  These sites focus on building relationships among people.  Common social networking sites include Facebook.com and MySpace.com.  Social networking sites provide collectors with the richest source of social media-based information.

·         Microblogging Sites:  These sites deliver content in short bursts.  The most popular microblogging site is Twitter.com, which delivers information in messages of no more than 140 characters.  These sites can provide debt collectors with up-to-date debtor information such as current whereabouts, employer, activities and future plans.

·         Professional Network Sites:  These sites are a combination virtual business card holders and social networks.  These sites enable users to recommend connections, share information about industry-related events, post resumes, and other features that relate to professional matters.  The most popular professional network site is LinkedIn.com.  These sites are helpful in providing debt collectors with current employment information.

·    Blogs:  These sites include personal and corporate online journals.  Many corporate blogs are maintained by the organization such as Microsoft’s IEBlog (http://blogs.msdn.com/b/ie/) or Vons Today at Vons blog (http://community.vons.com/t5/Our-Blog/bg-p/swy001).  Other corporate blogs are maintained by public blogging platforms such as WordPress.com, TypePad.com, and Blogger.com.  Personal blogs may include valuable information about a debtor’s lifestyle and whereabouts.

·         Video Sharing Sites:  These sites allow users to upload and comment on videos.  The most popular video sharing site is YouTube.com.  Some people use these sites as video blogs that may provide debt collectors with useful details.

·         Social News Sites:  These sites accept and distribute news stories by users.  One of the most popular social news sites is Digg.com.

·         Social Measuring Sites:  These sites measure the quality of content that exists on the Internet.  A popular social measuring site is Technorati.com.

·         Social Bookmarking Sites:  These sites allow users to share, organize, and search bookmarks of web resources.  A popular social bookmarking site is delicious.com (formerly del.icio.us).

·         Social Q&A Sites:  These sites allow users to submit questions or answer questions.  Two popular social Q & A sites include Answers.com and Yahoo! Answers (anwers.yahoo.com).

·         Photo Sharing Sites:  These sites allow users to upload and comment on photos.  Popular photo sharing sites include Flickr.com and Twitpic.com.

·         Social Search Sites:  These sites are social media-enabled search sites where users can create communities.  The most popular search sites are Yahoo.com and Google.com.

·         Niche Communities:  These sites have evolved from message boards into full-fledged communities.  Niche communities are focused on serving individuals with specific needs, such at Match.com for singles and Classmates.com for school alumni.

·         Social Email:  Social email platforms include Google Buzz.

·         Comment Communities:  Popular comment community Disqus.com describes itself as a platform that helps users build an active community from a web site's audience.

·         Regional Social Media Sites:  These sites are geographically focused.  An example is Examiner.com.

·         Podcasting Communities:  These sites are social networks that connect podcasters, advertisers, and listeners.  An example is Blubrry.com.

·         Blog Networks:  These sites are similar to niche communities.  These sites are comprised of blogs that address specific topics such as technology, politics, etc. Popular blog networks include Gawker.com, Jezebel.com, and Gizmodo.com.

·         Blogging Communities:  Blogging communities encourage bloggers to share and interact with one another as well as create regular blog posts. Popular blogging communities include BlogHer.com and LiveJournal.com.

·         Presentation-Sharing Sites:  These sites allow users to share their presentations.  The most popular presentation sharing site is SlideShare.com.

·         Content-Driven Communities:  These sites, referred to as “wikis,” provide and collect encyclopedia type information.  The most common wiki is Wikipedia.org.

·         Product-Based Communities:  These sites are tied to electronic commerce sites where goods are bought and sold.  These communities allow the exchange of information related to the products and services that are being bought and sold.  These communities are known for providing ratings and reviews as well as provide question and answer forums.  The most popular product-based communities are Ebay.com and Amazon.com.

·         Review & Recommendation Sites:  These sites have features similar to those on product-based communities.  However, these sites are not necessarily associated with products or services.  For example, TripAdvisor.com relates to travel and Shelfari.com relates to books.

·         Social Media Sites that Defy Definition:  This category relates to sites that cannot be easily classified.

Different social media platforms appeal to different social media user segments.  In a March 2011 blog post (“Facebook Demographics Revisited – 2011 Statistics”) on SocialMediaToday.com, Ken Burbary noted that 35% of U.S. Facebook users were 18-25 years old and an additional 20% were 26-34 years old.

A similar September 2010 blog post (“LinkedIn Demographics and Visitor Statistics“) on BooleanBlackbelt.com noted that 38% of LinkedIn users were 35-49 years old and an additional 32% were 50+.  As such, Facebook appears to be the best social media platform for finding debtors under 35 years of age while LinkedIn appears to be the best social media platform for finding debtors 35 years old and older.

From a debt collector’s perspective, the widespread use of social media and the transformation from a private and closed society to one of transparency has created opportunities.  As social media users become increasingly open, transparent and comfortable sharing personal information within the social media universe, an increased amount of valuable information will continue to surface on debt collectors’ radars.  Such information includes location, employment, income and lifestyle details.  

This information, combined with information obtained through traditional methods, can increase a collector’s effectiveness.  Access to this information, however, does not come without its risks.  As such, debt collectors must understand the requirements and pitfalls associated with social media use.

Introduction to the Social Media for Debt Collectors Blog

There is no question that social media use has become ubiquitous.  There are hundreds of millions of users logging onto one or more social media platforms every week – and in some cases daily.  As such, it is no surprise that industries have been hard at work determining how to best make use of social media and its often-frequented social network communities (e.g., Facebook), that comprise the largest segment of the social media universe.

Facebook claims over 500 million active users, Twitter processes over 155 million tweets per day and LinkedIn maintains over 100 million registered professionals.  According to a February 2010 release by Pew Internet (“Social Media and Young Adults”), 72% of young adults and 40% of people over 30 use Facebook, Twitter and other social media platforms.

A January 2011 release by eMarketer Digital Intelligence (“Facebook Drives US Social Network Ad Spending Past $3 Billion in 2011”) states that in the United States “marketers will spend $3.08 billion to advertise on social networking sites this year.”  According to the report “spending will be up 55% over the $1.99 billion advertisers devoted to social networks in 2010 and will rise by a further 27.7% next year to reach nearly $4 billion.”  It is no wonder that organizations are looking for ways to leverage what social media brings together - people.

One industry that believes that it has found a great use for social media and social networks is the debt collection industry.  Increasingly, debt collectors are finding social media helpful in obtaining debtor information.  Through social media, debt collectors can track down a debtor’s home and work locations, lifestyle information, lists of friends and family, and information related to whether a debtor has the financial wherewithal to make payments on a defaulted debt.  Debt collectors also find social media useful in communicating with debtors.

In a November 2010 Charleston Daily Mail interview (“Florida Woman Claims Debt Collector Harassed Her On Facebook”), Amy Webb, CEO of Maryland-based Webbmedia Group, stated that “the reality is that debt collectors, law firms, private investigators - you can come up with a long list of people - are using Facebook as well as geo location networks such as Gowalla and Foursquare to track people down.”

Unfortunately for debt collectors, social media has its drawbacks - drawbacks that can lead to legal action, regulatory criticism and reputational harm.  Plaintiffs’ attorneys are beginning to develop an interest and expertise in social media and have begun to file social media-based lawsuits.

According to Ed Winn III, general counsel for the Association of Progressive Rental Organizations, “courts, lawyers, collectors, consumer advocates and government agencies are adapting the existing collection laws to this new world of communications.”

Suzanne Martindale, staff Attorney for Consumers Union and Susan Grant, director of consumer protection for the Consumer Federation of America, in a May 27, 2011 letter to the Federal Trade Commission, stated that “new technologies can increase both efficiency and accuracy in the debt collection process by improving information flow between original creditors, debt buyers and consumers and facilitating dialogue between debt collectors and consumers.  However, reasonable safeguards must be put in place to ensure that the use of newer technologies prevent consumer abuses throughout the debt collection process.”

According to a November 2010 ABC News interview ("Women Sues Debt Collector Over Facebook Messages") with David Cherner, legal counsel and director of state government affairs for the Association of Credit and Collection Professionals, "there are certain ambiguities in the [federal Fair Debt Collections Practices Act] that create risks for debt collectors to communicate with consumers in certain ways.  There needs to be debate about modernizing the law so that consumers can be communicated with how they choose.  I think there certainly needs to be a broader debate about communications with consumers.  The FDCPA was enacted so long ago and consumers communicate in so many ways and, not only that, but they want to be communicated with in so many ways."

In an MSNBC.com interview (“Debt Collectors Troll Facebook — Are They Going Too Far?”), Florida attorney Billy Howard, head of the consumer protection department at the law firm of Morgan & Morgan and a leading figure in social media-based litigation, calls social media "a dangerous weapon" that some debt collectors use to deliberately harass people.  According to Howard, "they're using Facebook because it adds that extra shock value. The more shocking, the more harassing, the more outrageous, the more these debt collectors get paid.  What makes it so dangerous is you can contact somebody's family and friends very quickly and very easily, and you can set off a domino effect of panic that can be devastating."

Opinions for and against the use of social media in the debt collection field are growing.  And with the initiation of the first social media-based lawsuits, the risks are also growing.  This risk is increased by a lack of regulation addressing the use of social media in the debt collection industry.  Therefore, over the short term much of the guidance that will develop will largely result from developing case law.