Debt collectors: You may “like” social media and texts, but are you complying with the law?

We get this question a lot: “Is it OK to use text messages or social media to collect debts?” Do you want the short answer or the more detailed one? The short answer is that the Fair Debt Collection Practices Act doesn’t prohibit collectors from using texts or social media. But – and this is a major caveat – recent FTC law enforcement actions suggest that using them can present particular compliance challenges. That’s the short answer. If you collect debts as part of your business, read on to find out more.

The FDCPA doesn’t prohibit collectors from using any particular form of communication, except postcards. (A postcard, of course, reveals the existence of a debt to anyone who sees it.) But like traditional letters and phone calls, communications through texts and social media must follow the law. That means:

They can’t be deceptive. FTC cases have challenged deceptive “door openers” – texts that used false pretenses to get consumers to call the collector back. For example, defendants in the Messaging for Money law enforcement sweep sent texts like this:

YOUR PAYMENT DECLINED WITH CARD ****-****-****-5463
. . . CALL 866.256.2117 IMMEDIATELY.

To reasonable consumers, that could look like a fraud alert from their credit card company. In fact, it was a sneaky – and illegal – way for collectors to get a response from the person they claimed owed money. Similarly, a friend request that doesn’t disclose that the “friend” reaching out to the consumer is really a debt collector would run afoul of the law. Debt collectors also shouldn’t use social media to deceive third parties. A collector can’t obtain location information about a consumer by using false pretenses to approach a friend or coworker – e.g., by using a fake Facebook account to send a friend request to a purported debtor’s social connections in the hope of uncovering address or asset information.

They must provide the appropriate disclosures. According to Section 807(11) of the FDCPA, the initial communication between a collector and a consumer must disclose that it’s from a debt collector attempting to collect a debt and that any information obtained will be used for that purpose. Later communications must make it clear that they’re from a debt collector. As the FTC’s settlement with National Attorney Collection Services illustrates, there is no “But that’s tough to do in a text . . .” defense under the law. The disclosure provisions of the FDCPA apply regardless of how debt collectors choose to communicate with consumers.

They can’t reveal the existence of a debt to third parties. Under Section 805(b) of the FDCPA, it’s illegal to reveal the existence of a debt to a third party. What’s more, Section 806(3) prohibits publishing “a list of consumers who allegedly refuse to pay debts.” Those are especially important lessons for collectors in the social media context, where a post on Facebook, Twitter, or Tumblr can instantly be viewed by others – and especially by consumers’ social connections. An FTC staff letter closing an investigation of a debt collection attorney illustrates that point. According to the letter, “[D]ebt collectors may violate the FDCPA and/or the FTC Act by . . . requesting to join debtors’ social media networks (for example, by sending a ‘friend request’ on Facebook).” Because it appeared to be an isolated incident for the purpose of collecting a commercial debt – activity that falls outside the FDCPA – that matter was closed. But prudent members of the industry take it as a lesson learned.

They can’t be used to impose illegal charges.  The FDCPA prohibits debt collectors from collecting charges unless the charge is expressly authorized by the agreement creating the debt or permitted by law.

One final note about your own online or social media presence. Some industry members use their websites and social media pages to offer helpful information for consumers – for example, a breakdown of costs or an easier way to dispute a debt. So while we’re on the subject of new forms of communication, consider whether lawfully using these platforms to offer general information can benefit both your company and consumers.