The federal regulation of the way social media and online sites are used to collect debt will be a focus of the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) in 2013, according to an article in Bloomberg today.
Both the CFPB and FTC are weighing potential new rules around the use of social media sites like Facebook in the collection of debts, writes Bloomberg in “Facebook Friends Fronting Debt Collectors Draw U.S. Regulation.” Earlier this week, the Federal Financial Institutions Examination Council (FFIEC) – an interagency body tasked with providing uniform standards for banks across several federal agencies – issued proposed guidance on banks’ use of social media.
While federal regulators are looking at financial institutions’ use of social media in the collection of debt, any rules would have direct impact on the ARM industry.
By way of example, the piece notes the very large settlement last year between American Express and CFPB-FDIC over, among other things, the collection of time-barred debt. This settlement sent ripples through the debt buying community when it was announced.
The article also reaches out to members of the ARM industry for their input, with Mark Schiffman of ACA International noting that ACA tells its members to avoid social media for debt collection as “the rules on it are not clear.” Similarly, a spokesman for debt buyer Portfolio Recovery Associates noted that the company has a policy to not use social media for the purposes of debt collection.
After the CFPB’s complaint system begins taking complaints on third party debt collectors, scheduled for the second quarter of 2013, any new regulations aimed at the ARM industry could theoretically include social media prohibitions.