Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are restricted in the manner in which they may seek to collect a debt. Among those restrictions are strict limits on communications with debtors and avoiding deception in those communications. An article on the use of social media by debt collectors that I read last week in the American Banker (article access may require a subscription), which does a pretty good job covering technology issues related to the financial and payments industry, focused my attention on this topic as an example of how business practices involving social media raise questions on what should be allowed.
If we think of social media applications as simply variations of other communications tool, there should not be much difficulty in analyzing whether the FDCPA rules apply to social media when used by debt collectors — generally speaking, the rules should apply. Yet, the extent to which the FDCPA limits social media use by debt collectors is an open issue in some circles. So, much so that as the American Banker article mentioned above reports that a court in Florida recently issued an order restraining a debt collector from contacting a debtor via Facebook. As another example, see a story on The Consumerist website reports a particularly interesting and extensive use of Facebook by a debt collection agency to friend unsuspecting debtors and thereby collect information that might otherwise not be available to the collectors.
Expect the states and the FTC to step into what appears to be something of a void — putting aside whether it should even be regarded as that. On April 28, the FTC held a day-long public workshop entitled “Debt Collection 2.0: Protecting Consumers As Technologies Change”, for which the period to submit additional public comments runs through May 27. Given all this, it is likely that the FTC will either recommend a regulatory framework or step up its own enforcement actions based on its authority to investigate unfair and deceptive trade practices.
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