Dangers of social media debt collection

The Great Recession led to higher volumes of outstanding loans and other forms of credit than ever before, and in the years directly following the financial crisis, many businesses and consumers had difficulty when trying to repay their debts. With the economy beginning to show signs of improvement, debt collection practices have spiked, leading to an influx of agencies that might not know the law well enough to follow it.

Debt collectors have started using new technology to conduct their processes, including social media and other web-based communications platforms. As a result, many lawmakers are looking to pass legislation that will regulate how debt collectors can perform their responsibilities in new arenas, as current laws are not comprehensive enough to manage all of the different avenues.

Social media debt collection

Business Insider recently reported that the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have noticed an increase in the volume of complaints currently streaming in regarding abusive debt collection practices over social media websites. These two federal entities are directly responsible for the enforcement of debt collection laws and have increased their auditing activities to cut down on illegal practices.

According to the news provider, some debt collectors have been aggressive over the social media websites, posing as individuals to get the attention of and open lines of communication with those they are seeking funds from. Fraudulent information regarding the identity of debt collectors is in direct violation of the Fair Debt Collection Practices Act (FDCPA), regardless of the medium used to communicate with debtors.

The source explained that the CFPB, along with the FTC, is working to create and enforce new laws that would prohibit collection agencies from conducting these types of abusive or aggressive processes specifically over social media. 

Finally, Business Insider explained that debt collection activity is predicted to spike in the coming years, with CFPB data indicating that this industry accounts for more than $12 billion in potential revenues.

Hiring pros to mitigate risks
Failure to comply with the FDCPA can lead to serious penalties, including fines and sanctions from several federal watchdog organizations. As more companies look to obtain outstanding debts from clients, executives must ensure all practices are aligned with regulatory compliance statutes.

Outsourcing the task to a firm that specializes in debt collections decreases the risks of abusive and aggressive activities, while simultaneously improving the efficiency and timeliness of receiving the paid dues.