Debt collectors' use of social media examined
Debt collectors using text messages and social media to pursue delinquent borrowers could be placed under scrutiny as the Consumer Financial Protection Bureau considers rules as part of a crackdown on the collection industry.
The bureau said on Wednesday that before it formally proposes any rules, it wants to hear how collectors verify borrowers' information and contact consumers.
Among questions it is asking consumers, banks and the collection industry is whether there could be privacy concerns or other harm from communicating with debt collectors via text message, social media or other Internet-based tools.
In recent months, regulators have warned debt collectors against misleading borrowers. “Now it is time to look closely at how we can improve and modernize existing measures that were written before the Internet, before social media and before many other new communication technologies,” Richard Cordray, the bureau's director, said.
“We are seeking to hear from the public ... about what works and what does not in the current debt collection market,” he said.
Mark Schiffman, a spokesman for ACA International, a trade group for third-party collectors, said his members want clarity on whether and how they should use communication methods.
For instance, debt collectors cannot disclose debts except, in some cases, to a borrower's spouse or attorney. But it might be difficult to confirm who hears a cellphone voicemail or sees an email or Facebook message.
“The world communicates a whole lot differently today,” Schiffman said. He said his group tells members that using public sources such as LinkedIn or Facebook to find information is fair game.
“You're going at your own risk if you go any further,” he said.
Consumer bureau staff members did not give a timeline for when they might propose rules. They said they would probably convene a small business panel to discuss potential rules first.