Most businesses these days are creating social media positions to co-opt the reach of Facebook, debt collection agencies included. A Florida woman made headlines late last year when she hired an attorney to sue a debt collection agency for harassing her via Facebook. The federal government, which received more complaints about debt collection than any other industry in 2010, is considering how to update consumer protections for the social media era.
Debt collectors and social media
It’s no secret that debt collection agencies use the Internet to find people who owe money. The Orlando Sentinel first reported about Melanie Beacham of Tampa, Fla., last November when she fell $362 behind with her car payments. Beacham’s auto loan account was promptly sent to collection. Calls, text messages and emails started rolling in. After she worked out a payment plan with her creditor, a debt collection agency called MarkOne Financial sent a message to all Beacham’s friends on Facebook asking them to urge her to call the debt collector. Beacham hired an attorney to sue MarkOne, citing violations of federal and Florida law. The lawsuit claims the debt collection agency harasses consumers, their families and their friends using Facebook. The lawsuit is pending, but in March, a judge ordered MarkOne not to contact Beacham, her friends or family via Facebook or any other social networking site.
The Fair Debt Collection Practices Act
After the court scolded MarkOne, Beacham’s attorney, Billy Howard, head of the consumer protection department at the law firm of Morgan & Morgan, said it was the first ruling in the country that specifically banned a debt collector from using social media. But that hasn’t stopped MarkOne. Three weeks ago Howard filed a suit on behalf of another woman against MarkOne for Facebook debt collection harassment. But posting messages on Facebook telling the world someone is behind on a debt could be a violation of the Fair Debt Collection Practices Act of 1978. That was enacted decades before the advent of Facebook, but the Association of Credit and Collection Professionals said the rules apply to social media the same as phone calls or letters. Debt collectors can only contact third parties if the collection agency can’t locate the debtor. Debt collectors are also barred from disclosing to a third party why the debtor needs to be contacted. In both these instances, MarkOne appears to violate the law.
Debt collection 2.0
A Federal Trade Commission’s annual report required by the Fair Debt Collection Practices Act shows that the agency received more complaints about debt collection in 2010 than any other industry. The FTC recorded 140,036 complaints about debt collectors, 27 percent of all complaints received by the agency and an 18 percent increase from 2009. The FTC will host a public workshop in Washington, D.C., April 28 called Debt Collection 2.0 that will include a discussion about social media. In July, the new Consumer Financial Protection Bureau will begin working with the FTC to create debt collection rules, field complaints and educate both consumers and debt collectors.