Feb 14, 2013 Philip Burgess
The federal government has increased efforts to enforce the Fair Debt Collection Practices Act (FDCPA) in recent months, especially as the consumer and corporate credit bubbles continue to swell. With such a large volume of outstanding loans, many businesses have turned their attention to collections, as this industry is becoming more profitable.
This has posed an issue for both enterprises and consumers, as some newcomers to the debt collections industry have increased the negative stigma attached to the processes. Collection agencies need to be especially vigilant when training employees, ensuring that all staff members know the laws and act accordingly when contacting debtors.
Social media rising
Facebook, Twitter and other social media websites have changed the ways in which most businesses market and strengthen their brands. With such massive participation rates among the most popular websites, some debt collection agencies have used the platforms to communicate with debtors, though this action has been viewed by some regulators as shoddy at best.
American Banker recently reported that debt collection agencies should consider steering clear of social media until proper regulations and guidance are provided by oversight entities. Though the FDCPA can be applied to some of the more technologically advanced communication methods available today, others pose unique challenges to collectors and enforcement agencies alike.
According to the news provider, the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have each increased enforcement efforts against abusive debt collection agencies, while the former is becoming especially involved with the use of social media. The FTC issued a statement that explained that the FDCPA can be applied to any form of communication because of the language with which it is written.
Still, aside from the communications aspect of social media, the platforms pose other risks that would be in violation of the FDCPA. The source explained that should a debt collector start a social media page and only connect with debtors, the finished product would be a publicly accessible list of those in debt, which is in direct violation of the law.
Many debt collections agencies and advocacy groups have already outlawed the use of social media by their employees. This strategy seems to be safest, as a large volume of collection efforts done through the communications technology have already been cited as illegal. When not entirely comfortable with the laws and best practices of debt collections, companies should consider outsourcing the responsibilities to a certified firm.