Don't Let a Debt Collector "Friend" You on Facebook: The Legal Issues Posed by Internet Debt Collection
By ANITA RAMASASTRY
|Tuesday, October 19, 2010|
Have you ever been called by, or received mail from, a collection agency -- and wondered how the agency located you? Before the Internet, the caller might simply have used the phone book or a mailing list. But now, the agency may have used social-networking sites such as Facebook or MySpace to research you as well.
With the economic downturn, many consumers have fallen behind on various payments -- such as payments on car loans, mortgages, and credit-card debt.
Collection agencies essentially use social-networking sites for three purposes: One is to track consumers down even despite common names, unlisted phone numbers, changes of address, and the like. The second is to ascertain whether, despite unpaid debt, a consumer is still making unneeded purchases -- as evidenced, say, by a photo of a fancy sportscar on his Facebook page -- and clearly has the resources to pay the debt at issue. The third -- employed more rarely -- is to harass or shame the consumer.
Of course, it's not only your own Facebook or MySpace page that may reveal information about you: Such information may also be found on the web pages of other parties -- friends, relatives, neighbors and the like -- and thus, they too may be sources of information if the debt collector can track them down.
Some of this collection-agency activity -- such as trying to find the location of a debtor by surfing the Internet -- may be perfectly legal. It might be fine, for instance, to use Michael S. Smith's public Facebook page to verify that the Michael S. Smith who is the debtor -- and who lists Seattle as his home city on Facebook -- is probably also the Michael S. Smith who is listed in the Seattle public phone directory (or to rule out another Michael S. Smith, who lives in Denver). Other tactics, however, clearly are not acceptable--as a court recently ruled, in holding in favor of a consumer.
In this column, I will discuss the case law and the way in which a federal law, the Fair Debt Collection Practice Act (FDCPA), may protect consumers with respect to their social-networking activity.
Debt Collecting 3.0: Applying the FDCPA to Debt Collectors' Internet Activity
Under many state laws, debt collectors may not publicize a debt -- or disclose the debt to a person's friends, family members, or colleagues -- in order to use peer pressure or public shame to exact payment. Nor can debt collectors use abusive or oppressive methods to collect. Debt collectors, for example, must stop calling a debtor's home or place of employment after being asked to communicate in writing.
The federal FDCPA, which governs consumer debt collection agencies, provides rules on how these agencies can obtain information about a debtor's location, but nothing in the statute addresses the use of social-networking sites.
Among other things, the FDCPA (1) places restrictions on a collection agency's revealing or discussing the nature of debts with third parties (other than the consumer's spouse or attorney); (2) prohibits agencies' making contact with the debtor regarding a debt by using embarrassing media, such as a postcard; (3) prohibits the use of any language or symbol, other than the debt collector's address, on a mailing envelope except that the collector may use its business name if it does not indicate that it is in the debt-collection business; and (4) prohibits the publication of a list of bad debtors.
The FDCPA is silent on whether the first or second rules -- which seem like they might apply -- cover social-networking sites. But just last week, a court in Minnesota asked that question and sided with the plaintiff.
The Minnesota Case: Allegations of Shady Tactics Lead a Court to Side with the Debtor
In the Minnesota case, Sohns v. Bramacint, the plaintiff was late on her monthly car payments, and her lender turned the debt over to a collection agency.
Allegedly, the agency's first bad decision was to use a caller-ID spoofer to make it look like its collection calls were calls from the plaintiff's mother-in-law. The agency was also alleged to have accessed the plaintiff's MySpace page, learned that she had a daughter, and used that fact to subsequently intimidate her. Indeed, there was evidence in the record to suggest that the collection agency's "investigator" said to the plaintiff, after mentioning her "beautiful daughter," something to the effect of "Wouldn't it be terrible if something happened to your kids while the sheriff's department was taking you away?"
The plaintiff sued the agency under the FDCPA; moved for summary judgment; and won. The Court held that the collection agency engaged in conduct the natural consequence of which was to harass, oppress, or abuse the debtor in connection with the collection of the debt; used false, deceptive, or misleading representations or means in connection with the collection of the debt; and used unfair or unconscionable means to collect or attempt to collect the debt.
Additional Suits Show that Debt-Collection Agencies Might Frequently Be Making Use of Debtors' Social-Networking Pages
When another consumer, Paula Newland, fell behind on her payments on her 2005 Chevy, she alleges that she was shocked to see that very information appear on her MySpace page. Based in part on the posting, Newland sued the collection agency, claiming that the agency had violated collections law by harassing her on the Internet, as well as on the phone, and in person. She alleged violations of Michigan law, and sought a minimum award of $25,000, representing "damage to her business and community reputation, extreme mental distress, aggravation, humiliation and embarrassment."
Newland also alleged that the collection agency's methods included not only posting information about her indebtedness on her MySpace page, but also threatening to camp out in front of her house and to park a "shame automobile" there over a weekend. Newland alleges that both those methods violated Michigan's law which prohibits collectors from "[u]sing a shame card, shame automobile, or otherwise bring[ing] to public notice that the consumer is a debtor."
Another consumer, Jennifer Dicks, became acquainted with a collection agency when she missed two payments on her Chevrolet Cavalier--causing the agency to repossess it. She alleges that, when she went to pick up the car, the agency informed her that they had planted a GPS device on her car to track it down. She also alleges that, after she missed a later payment, the agency created a website with the domain name "jenniferdicks.com" -- and that site was identical to the agency's website except for the heading: "Jennifer Dicks isn't paying for her Cavalier!" And indeed, the domain name is registered to the agency's president, a co-defendant in the case.
Unlike the other suits noted above, which focused on collection law, Ms. Dicks invoked privacy torts. Her suit alleged that the actions by the agency constituted "invasion of privacy, an intrusion into private affairs, and public disclosure of private facts."
There Are Lessons to Learn For Both Sides in Consumer/ Debt Collector Clashes
For consumers, the main lesson to be learned from these debt-collection dramas is to be careful about Facebook and MySpace postings, and wary of accepting "friend" requests from people they do not know.
For collection agencies, the lesson to be learned is that, while existing collection law was not written with social-networking sites in mind, it very likely will still apply to tactics that employ these sites. Moreover, the same legal rules -- prohibiting threats and shaming as collection strategies -- will very likely apply when the banned actions and messages occur online, rather than via mail, in person, or otherwise.
And finally, collection agencies would be wise to remember that there is no exception to general criminal laws, such as anti-harassment laws, for social-networking sites. If there is a gap in the civil law regarding collection-agency actions, agencies may find local or even federal prosecutors stepping in to try to fill the gap.
Ramasastry is currently on leave from the University to work for the federal government. The views expressed in this column are solely those of Ramasastry in her personal capacity and do not necessarily represent the views of any of her employers, past or present.