Congress enacted the Fair Debt Collections Practices Act (“FDCPA”) on September 20, 1977 to protect consumers by eliminating abusive debt collection practices. At that time, the only modes of communication in debt collection were land-line telephones and U.S. Mail (now known as “snail mail”). Steve Jobs had just invented the first Apple I personal computer, the first cellular network had not yet been installed in the United States and Mark Zuckerberg (the “co-founder” of Facebook) was not yet born. For those of you familiar with the text and application of the FDCPA, it is painfully clear that Congress did not anticipate the emergence of new technologies utilized in the consumer collection of debts. Case law addressing the use of voicemail messages confirms this conclusion.(1)
On March 15, 2011, the FTC solicited public comment regarding advances in technology, consumer protection and the debt-collection industry, purportedly to provide more certainty to the industry on this subject. The Electronic Privacy Information Center, which focuses public attention on emerging civil liberty and privacy issues, issued a comment in response.(2) In their comment, EPIC gave some examples of recent suits filed which involve the use of new technology in the collection of debts:
- In 2009, a resident of Cook County, Illinois sued JP Morgan Chase after a self described “investigator” posted the following message on his daughter’s MySpace page; “We have been retained by JPMorgan Chase Bank to locate and repossess their missing collateral (sic) a 2007 Mercedes GL450. Please contact our office immediately…Failure to contact me will result in further action against your father James Ricobene.”(3)
- Also in 2009, a Phoenix Arizona resident sued Auto Financing Network, Inc. for creating a website using her name (www.jenniferdicks.com). When visitors went to this site, the received a message saying “Jennifer Dicks isn’t paying for her Cavalier!”(4)
These are extreme examples, but they give us insight into the concerns of consumer advocates and the governmental agencies responsible for enforcement of the FDCPA. EPIC suggested that the FTC clarify that contact via social networking sites, text messaging and email should all be prohibited. Certainly, EPIC’s position is not entirely without merit, but as an industry we recognize the need for a more balanced approach in maintaining the spirit of the FDCPA while acknowledging the inherent risks in allowing the use of modern technologies in the collection of consumer debts.
The following statistics help highlight the relevancy of these issues:
- In 2011, 92% of all online adults sent and receive email.(5)
- It is estimated that out of the 6.8 billion people on the planet earth, 5.1 billion own a cell phone.(6)
- 40% of adults living in poverty use only mobile telephones (do not use land-line phones at all).(7)
- Twitter had an average daily signup rate of 460,000 new accounts, and averaged 37 million tweets a day in February 2011.(8)
- LinkedIn has over 101 million members worldwide. 44.2% of them are in the United States.(9)
- Facebook had over 500,000,000 active users in 2011. 48% of 18-34 year old users check Facebook when they wake up, 28% of them before they even get out of bed.
So the question becomes, how can consumer debt collection attorneys utilize newer technologies without running afoul of the dictates of federal law? The main concern with regard to the use of these newer technologies is the risk of violating the FDCPA’s prohibitions on communicating with a debtor at an inconvenient time or place, communications with third parties,(10) harassment or abuse in connection with the collection of a debt,(11) causing charges to be made to any person for communications by concealment of the true purpose of the communication,(12) and potential violations under the Telephone Consumer Protection Act.(13) These issues have not been thoroughly addressed by the courts but some guidance has been provided through academic analysis.(14)
Email communications have become a popular, and even preferred method of communication by many debtors over the past 10 years. However, email presents some particularly troubling compliance pitfalls. Namely, there is no way of verifying a debtor’s identity when responding to an email. Anyone can create an email address purporting to be someone else. Additionally, there is often no expectation of privacy when email is being utilized to communicate (such as emailing from work, a public kiosk or a mobile phone). The risk of unlawful third party communications is simply too great. Some collection firms are willing to take this risk, as long as a debtor has consented to receive email messages from debt collectors. However, other firms choose to avoid email communications with debtors altogether. One solution utilized by a few collection firms is the use of a private email server. Specifically, if a debtor wishes to communicate with a collection firm electronically, they must log in to the firm’s website, confirm their identity and give explicit consent to communicate by this medium. This solution serves to alleviate the identity issue, and minimize the risk of unlawful third party communications.
With the mainstream use of mobile phones (often with the exclusion of land-lines altogether), contacting debtors via cellular phone presents some unique opportunities, and problems. First, if a collections firm is using an autodialer, calls to a debtor’s cell phone are prohibited without express consent from the debtor. Even if a collection firm is not utilizing an autodialer, the portable nature of mobile phones presents problems which should be clear to us. For example, a collector would have no way of knowing exactly where a debtor is physically located when they are calling a mobile phone. If a debtor is in California, but the collector is calling at 9AM Eastern Standard Time, they have potentially violated the FDCPA’s prohibition on phone calls at inconvenient times. Also, if someone else is using the cellular phone, or a debtor has the phone on hands free mode in a car full of people, there may be a third party communication. Although this may seem no different than the same scenario on a home land-line, the risk of these situations is greater and more caution is warranted. Lastly, some mobile phone users still have a limited number of mobile minutes each month. Debt collectors must be cautious to not cause a debtor to incur additional phone charges as a result of their calls to a mobile phone. In sum, cellular phones can probably be utilized in debt collections with consent of the debtor.
Finally, the prevalence of social networking sites presents collectors with an almost irresistible desire to utilize this forum for skip-tracing and communicating with debtors. Certainly, these sites can provide some useful information on debtors, as long as the debtor has made such information public (no expectation of privacy). Also, our industry can use social networking for connecting to other professionals and clients. However, adding debtors as friends, emailing debtors, or publicly posting to debtors on a social networking site are all activities which debt collectors should avoid. Unlawful third-party communications, harassment, or abuse in violation of the FDCPA are almost certain to result.
Over the next year the debt collection industry should receive more detailed guidance from the newly created Consumer Financial Protection Bureau in the use of newer technologies in the collection of debts. It seems likely that there will be more strict guidelines in the use of these technologies. In the meantime, we must be cautious in our use of these technologies if we wish to avoid liability for violations of federal law. Also, our voluntary restraint in the use of these technologies can only serve to show the consumer protection interests that we, as an industry, take debtors’ rights seriously. Such an approach can only help us to advocate for clear, balanced and fair rulemaking and enforcement of the FDCPA.
(1) Foti v. NCO Financial Systems, Inc., 424 F. Supp. 2d 643 (S.D.N.Y. 2006).
(2) Comment of the Electronic Privacy Information Center to the Federal Trade Commission, “Public Workshop and Request for Public Comments and Participation,” May 27, 2011.
(3) Ricobene v. JP Morgan Chase et al., No. 09-CIV-02904 (N.D. Ill, Nov. 13, 2009).
(4) Dicks v. Auto Financing Network, et al., No. CV2009-021940 (April 24, 2009).
(5) Pew Research Center’s Internet and American Life Project, 2002-2011.
(6) Mobile Marketing Association of Asia.
(7) National Center for Health Statistics, 2011.
(8) The Huffington Post.
(9) LinkedIn Ad Platform.
(10) 15 USC §1692c.
(11) 15 USC §1692d.
(12) 15 USC §1692f
(13) 47 USC §227; If an autodialer is used in contacting a debtor on a cellular phone.
(14)Colin Hector, Debt Collection in the Information Age: New Technologies and the Fair Debt Collection Practices Act, 99 CALIF. L. Rev. 1601 (2011).