Debt collectors: You may “like” social media and texts, but are you complying with the law?

We get this question a lot: “Is it OK to use text messages or social media to collect debts?” Do you want the short answer or the more detailed one? The short answer is that the Fair Debt Collection Practices Act doesn’t prohibit collectors from using texts or social media. But – and this is a major caveat – recent FTC law enforcement actions suggest that using them can present particular compliance challenges. That’s the short answer. If you collect debts as part of your business, read on to find out more.

The FDCPA doesn’t prohibit collectors from using any particular form of communication, except postcards. (A postcard, of course, reveals the existence of a debt to anyone who sees it.) But like traditional letters and phone calls, communications through texts and social media must follow the law. That means:

They can’t be deceptive. FTC cases have challenged deceptive “door openers” – texts that used false pretenses to get consumers to call the collector back. For example, defendants in the Messaging for Money law enforcement sweep sent texts like this:

YOUR PAYMENT DECLINED WITH CARD ****-****-****-5463
. . . CALL 866.256.2117 IMMEDIATELY.

To reasonable consumers, that could look like a fraud alert from their credit card company. In fact, it was a sneaky – and illegal – way for collectors to get a response from the person they claimed owed money. Similarly, a friend request that doesn’t disclose that the “friend” reaching out to the consumer is really a debt collector would run afoul of the law. Debt collectors also shouldn’t use social media to deceive third parties. A collector can’t obtain location information about a consumer by using false pretenses to approach a friend or coworker – e.g., by using a fake Facebook account to send a friend request to a purported debtor’s social connections in the hope of uncovering address or asset information.

They must provide the appropriate disclosures. According to Section 807(11) of the FDCPA, the initial communication between a collector and a consumer must disclose that it’s from a debt collector attempting to collect a debt and that any information obtained will be used for that purpose. Later communications must make it clear that they’re from a debt collector. As the FTC’s settlement with National Attorney Collection Services illustrates, there is no “But that’s tough to do in a text . . .” defense under the law. The disclosure provisions of the FDCPA apply regardless of how debt collectors choose to communicate with consumers.

They can’t reveal the existence of a debt to third parties. Under Section 805(b) of the FDCPA, it’s illegal to reveal the existence of a debt to a third party. What’s more, Section 806(3) prohibits publishing “a list of consumers who allegedly refuse to pay debts.” Those are especially important lessons for collectors in the social media context, where a post on Facebook, Twitter, or Tumblr can instantly be viewed by others – and especially by consumers’ social connections. An FTC staff letter closing an investigation of a debt collection attorney illustrates that point. According to the letter, “[D]ebt collectors may violate the FDCPA and/or the FTC Act by . . . requesting to join debtors’ social media networks (for example, by sending a ‘friend request’ on Facebook).” Because it appeared to be an isolated incident for the purpose of collecting a commercial debt – activity that falls outside the FDCPA – that matter was closed. But prudent members of the industry take it as a lesson learned.

They can’t be used to impose illegal charges.  The FDCPA prohibits debt collectors from collecting charges unless the charge is expressly authorized by the agreement creating the debt or permitted by law.

One final note about your own online or social media presence. Some industry members use their websites and social media pages to offer helpful information for consumers – for example, a breakdown of costs or an easier way to dispute a debt. So while we’re on the subject of new forms of communication, consider whether lawfully using these platforms to offer general information can benefit both your company and consumers.

 

Comments

What about TCPA restrictions??

To broaden the application are Wireless providers implementing robo/auto dialers collection calls to personal office phone due to service line being disconnected in violation when there is no answer when the line is picked up. In this instance the robo/auto dials numerous times throughout the work day disrupting ordinary course of business and resembles tech bullying.

I have a question about the text message example. There seems to be a problem here. Let's say for example, that a consumer has a payment plan set up with a collection agency. Three months down the road there is a problem (insufficient funds, the card has been replaced by the issuer, etc.). The card is declined. Consumer has authorized contact by cell phone. Agency sends a text message with content very similar to the example provided. Is it still a violation of the FDCPA?

What about text reminders of payments due? What if the consumer stated a preference to receive text communications instead of voice or mail? Do those TOO need to state they are messages from a debt collector? In that case most people would prefer just to see the name of the organization, not the "this is a message from a debt collector" as part of the text. There's a prior arrangement and agreement by the consumer here.
It's not exactly about being "hard to do that in a text." It's about treating digital channels the way consumers expect and maintaining their privacy while still contacting them. There's potential for the mandated statement to be what reveals there is a debt, so in truth the FTC is ignoring the realities of this communication channel. In these scenarios wouldn't some practical flexibility be in order? To protect all concerned?
These days it's no longer realistic to communicate only by voice or postal letter with at least 50% of the population....

Isn't it also illegal for a debt collector to use a methofd of delivery that is C.O.D.(Cash On Delivery)? In instances where the debtor pays for the text, this could also be problematic for the debt collector as well correct?

"Those are especially important lessons for collectors in the social media context, where a post on Facebook, Twitter, or Tumblr can instantly be viewed by others"

No mention about posting PRIVATE MESSAGES then? Of course any debt collector posting things on a public board deserves to get into trouble!

Also,

"Under Section 805(b) of the FDCPA, it’s illegal to reveal the existence of a debt to a third party."

If the debtor shows his phone/PC to another that has a communiaction from a collector on it, (presumably just like showing a written letter) to another, it is surely the DEBTOR that is revealing the existence of the debt to another, not the collector!

The Debt Collectors, are predetors. It must extremely tough eegulations, an put them in prison.

Collection compliance can be a sticky topic. No body want to hear from them, but they are simply just doing their job. Many of these companies are great companies and do a great job of what they specialize in. I have not had to deal with them before, but I have had friends that do. They feel annoyed that they are speaking with them, when in reality it is their own fault. It's a very interesting topic. Thanks for sharing this blog!

Could it not be argued that since social media can be reviewed by the company that owns the platform, wouldn't that be the same as disclosing the debt to a third party?

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