FTC Warns Debt Collector About Using Facebook to Contact Debtor

[Post by Venkat Balasubramani]

In the Matter of Gary D. Nitzkin, P.C. (FTC Letter; Mar. 10, 2011)

Debt collectors have gotten into trouble over the use of social media to contact debtors. (See “Judge Orders Creditor to Stay Off Debtor’s Social Networking Pages.”) Facebook has also taken a stand against the use of its service by debt collectors. (“Facebook Warns Debt Collectors About Using Its Service.”)

The FTC jumped into the fray as well, and recently issued a closing letter to a lawyer who used social media to contact a debtor. Although the FTC declined to take action in that particular case (because the lawyer only did this on one occasion and the debt in question was a commercial debt which does not fall under the Fair Debt Collections Practices Act), the FTC articulated its position that debt collectors may violate the Fair Debt Collections Practices Act and/or the FTC Act by doing any of the following:

(1) requesting to join debtors’ social media networks (for example, by sending a “friend request” on Facebook), or making any subsequent communications, for the purpose of collecting a debt, without making the disclosures required by Section 807(11) of the FDCPA; (2) communicating with third parties other than in the limited circumstances permitted by Section 805(b) of the FDCPA; (3) communicating with third parties to obtain location information about debtors in a manner that violates Section 804 of the FDCPA; (4) utilizing social media in a manner that constitutes a publication of a list of debtors who allegedly refuse to pay debts, in violation of Section 806(3) of the FDCPA; and (5) communicating with debtors or third parties in a false, deceptive, or misleading way, in violation of Section 807 of the FDCPA.

I’m no FDCPA expert, but the FTC’s interpretation seems fairly expansive. It looks like the FTC is drawing a protective wall around the social networking profiles of debtors. Effectively, the FTC’s approach (for better or worse) will preclude a debt collector from joining a debtor’s “social network” for information collection purposes. (Nothing in the FTC’s letter restricts a debt collector from privately messaging a debtor, as long as the necessary disclosures are made along with the message. Whether or not a debt collector can privately message a debtor on Facebook without being their ‘friend’ depends on the debtor’s privacy settings.)