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.
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