Facebook Invaded by Debt Collectors
Social Media Breach Triggers Review of Privacy Law
With no clear cut and defining rules for engagement, debt collectors have managed to infiltrate Facebook and other social media channels in their pursuit to settle unpaid financial obligations of errant debtors. But as contact cases escalated over the years, consumers now point the method has tantamount to online harassment.
Earlier this week, the U.S. Federal Financial Institutions Examination Council (FFIEC) urged the public to comment on a proposed guidance posted at http://www.regulations.gov/#!documentDetail;D=FFIEC-2013-0001-0001 which seeks to once and for all lay down rules as to how far, if allowed, can collection agencies use social media to track down and communicate with debtors.
Although debt collectors will almost always jump over the fence just to get their jobs done, the FIEC said it wants to know what "other types of social media, or ways in which financial institutions are using social media" in order to be considered in the regulations.
According to the U.S. Consumer Financial Protection Bureau (CFPB), there are about 30 million consumers being tracked by collectors today in the U.S. alone, translating to a more than $12 billion in revenue annually for the debt collection industry. An amount the CFPB expects won't easily be given up.
But the FFIEC said the use of social media by a financial institution to attract and interact with customers can likewise impact a financial institution's risk profile.
"The increased risks can include the risk of harm to consumers, compliance and legal risk, operational risk, and reputation risk," the proposed guidance said.
"Increased risk can arise from a variety of directions, including poor due diligence, oversight, or control on the part of the financial institution. The proposed guidance is meant to help financial institutions identify potential risk areas to appropriately address, as well as to ensure institutions are aware of their responsibilities to oversee and control these risks within their overall risk management program."
The proposed guidance is expected to receive strong resistance from the debt collection industry, as what one lawyer told Bloomberg News.
"The law should not stand in the way of a consumer's desire to communicate in these new ways," John Bedard said in an interview.