Federal financial regulators are looking into ways to limit how debt collectors and banks can use social media in tracking down delinquent borrowers or attracting customers.
Social media slips between regulatory cracks
The Fair Debt Collections Practices Act, established more than 30 years ago, protects consumers from many abusive collection practices. However, those laws were established long before there was such a thing as the Internet or social media. Therefore, the rules have been spongy on the matter.
Mark Schiffman of the Association of Credit and Collection Professionals, an international trade association of debt collection firms, said “the rules on it are not clear,” while recommending its member companies avoid using social media for collection purposes.
Some debt collectors use social media
However, not every Accounts Receivable Management company has heeded those words.
Attorney Billy Howard spoke with writer Carl Dougherty about the practices of some debt collectors for a piece in Bloomberg.
“You get a friend request from some chick in a bikini,” Howard said. “You say yes, and then somebody says ‘by the way, I’m a debt collector.’”
Some say the practice at times borders on stalking or harassment.
Federal regulators looking at the problem
The Consumer Financial Protection Bureau and the Federal Trade Commission are looking into regulating how, or even if, debt collectors should be legally allowed to pursue debtors on Facebook, Twitter, Google Plus and LinkedIn.
The federal agencies have already laid down rules for debt collection businesses, regulating aggressive rhetoric, making sure customers are kept updated on any legal actions, and also making it easier for consumers to register complaints.
Banks, financial institutions also under microscope
Meanwhile, The U.S. Federal Financial Institutions Examination Council is urging the public to weigh in on its proposed guidance, seeking to lay down limitations for how financial institutions can use social media in attracting business. To view that guidance, go to http://www.regulations.gov/#!documentDetail;D=FFIEC-2013-0001-0001.
The Consumer Financial Protection Bureau says there are about 30 million American consumers being pursued by collection firms today. The Accounts Receivable Management industry earns about $12 billion in revenue each year.
Don’t be afraid to speak up
Consumers who feel they are being harassed by debt collectors should report the activity on line or by telephone to the Consumer Financial Protection Bureau or the Federal Trade Commission.