November 30, 2021, was a significant date within the collections industry, as the Consumer Financial Protection Bureau’s long-awaited Regulation F came into effect. The new Regulation was an important update to the 1977 Fair Debt Collection Practices Act (FDCPA), codifying how the industry could make use of novel digital channels that didn’t exist when the Act was passed four decades earlier.
The new rules put forth in Regulation F opened the door to the increased use of digital channels, such as email and text messages, for debtor outreach, and players throughout the industry have adapted their collections strategies accordingly. The use of social media messaging has received less attention than those digital channels, but may prove to be a highly effective avenue for interaction with debtors.
The Case for Digital Debt Collections
By placing a sharp limit on the number and frequency of phone calls a collector can make to a given debtor, regulation F had the effect of discouraging the industry’s reliance on telephone calls as a primary means of contact with debtors.
Physical letters and telephone calls have been the industry’s mainstay for generations, and retain their importance. However, even before regulation F came into effect there were clear signs that digital communications channels represented the industry’s future. A pre-pandemic survey conducted by the McKinsey Company found that, while the majority of creditors still relied on telephone calls and letters as their primary form of contact with debtors, debtors themselves favored digital communications — and that digital communications were more likely to result in a payment.
Embracing digital communications methods is an evolution, not a revolution, for collections agents — as the industry has made similar changes throughout its history. Over the past century letters and in-person collection efforts gave way to the use of landline telephones, and later to the predominance of cell telephones. The incorporation of digital communications channels into an omnichannel collection strategy is simply the next logical step along this path.
Social Media DMs Potentially Surpass Other Digital Channels
In the wake of regulation F, the collections industry has seen a renewed focus on communication through digital channels like voicemail, email, and SMS text messaging, which are not subject to the same numerical limitation as phone calls.
Oddly, direct messaging through social media channels has largely been overlooked as part of this broader shift to digital communication. TransUnion’s 2023 report on the state of the industry, for example, does not include social media in its discussion of the rise in digital communications efforts. This in part may be due to text messaging’s higher profile and ease of integration into existing telephone-centric workflows. Text messaging has experienced a sharp rise in use for marketing and brand communications in general, and its high message open and click-through rates make it an inviting channel of communication for collections agents.
That all said, in the longer run, social media direct messaging may hold even greater potential. Data from the Pew Research Center shows that over 80 percent of Americans use at least one social media channel, and that many use multiple platforms. This is consistent with Spokeo’s experience: Spokeo for Business’s search results typically turn up an average of seven social media platforms per user. While some of those may prove to be legacy accounts that remain public but are no longer used by the debtor, this diversity of social media usage by consumers provides a large number of possible avenues for contact.
Locating Debtors on Social Media
One key obstacle to using social media accounts as a way to contact debtors is the relative difficulty of obtaining that data. Texting requires only a phone number, which is easily acquired through legacy data providers. Social media data, however, is an area of weakness for traditional data providers, which draw their data primarily from sources in the financial sector. Since clients’ social media usage plays a minimal role in those interactions, alternative data sources are necessary.
Spokeo for Business is one such tool. Spokeo was founded in 2006 as a social media aggregator, today it can aggregate data from 120+ social media networks and it retains a leading position in social media search. This expertise can help mitigate some of the challenges that might otherwise limit social media’s effectiveness as a collections tool.
The Difficulty of Positively Identifying the Debtor
Many people share the same or similar names or use alternative spellings, diminutives, or nicknames. This can make positive identification difficult even in conventional settings, but the problem is exacerbated on social media. Many platforms allow anonymity or pseudonymity as a matter of policy, and those that require identity verification don’t necessarily meet the same high standards used in the financial sector.
Misidentification is costly in time and effort, and can potentially result in an unauthorized third-party disclosure. While Regulation F provides “safe harbor” protection against such disclosures when they occur through a good-faith error, individual courts may still rule against the creditor or collector if they feel that the effort expended on identification was insufficient.
Spokeo for Business harnesses billions of data points from over 5,200 sources, enabling it to make connections that might not be discernible through legacy data. A Spokeo search utilizing any combination of the information already available on file – the debtor’s name, along with their last known phone number, address, or email address, for example – usually will winnow the pool of possible individuals to a small number of likely candidates. A positive identification may require manual follow-up, but will usually be possible. At that point, the debtor’s social media profiles may be viewed as part of the search results even if the debtor did not use their real name in setting them up, such as in the case of anonymous profiles or those employing pseudonymous.
The Number and Variety of Possible Social Platforms
A second issue is the sheer number and variety of social media platforms a debtor may be active on. Some are well known: Facebook, Instagram, LinkedIn, TikTok, and X (formerly Twitter) all have significant name recognition and strong market penetration. Yet two of the top five platforms cited in Pew Research’s report were YouTube and Pinterest, which may not be thought of as traditional social media platforms (though both meet the criteria, providing a forum where users can connect and interact).
Spokeo for Business simplifies the process of locating a debtor’s public social media presence, wherever it should occur. At the time of writing our search canvasses 120+ individual platforms, spanning a broad range of interests, use cases, and target demographics.
Social Media Platforms’ Inconsistent Search Capabilities
It is possible to locate individual debtors and their posts on the major social media platforms through manual searches, though this is costly in time and effort, and not always an effective option. Mastering a platform’s distinct search capabilities is certainly possible, but time-consuming, and the process must be repeated for each platform and each debtor — which can result in an exponential time investment.
Google or other web search engines offer an alternative. Their search syntax makes it possible to repeat the same search across multiple platforms, by restricting results to a single site. This may turn up enough public posts to make identification possible, but it may not, and there is no way to know whether a given debtor has ever been active on a given site.
Spokeo for Business circumvents these limitations by providing deep search capability across 120+ social media platforms, all within one product with a single intuitive, easy-to-use interface.
Practical Considerations with Digital Debt Collection Through Social Media
Though social media messaging holds great promise as part of an omnichannel collections strategy, it is not without potential hazards and limitations that must be planned for. These include regulatory constraints, potential legal or compliance issues, and consumer pushback.
Regulatory Constraints
Regulation F does not provide for unconstrained use of social media DMs for collections. While the new rules do not limit DMs to the seven communications per week allowed for phone calls, other restrictions still apply:
- Time and place restrictions forbidding collectors from calling at inconvenient times, or in inconvenient locations, remain in force.
- Consumers may request that you not use their social media DMs in the future as a means of contact, either verbally or in writing.
- Debtors must be provided with a clear and straightforward method for opting out of future communications.
- Collectors must identify themselves as such in any communication, and may not send a “friend request” or otherwise attempt to establish contact under false pretenses.
- A social media direct message cannot be considered a “limited content message” as a voicemail is.
Finally, as specified in Section 1006.22(f)(4) of the regulation, communications regarding a specific debt can only take place through a social media platform’s private/direct messaging system. They cannot be made publicly, or be viewable by the debtor’s contacts.
Compliance and Legal Issues
Compliance and liability issues will also need to be considered carefully. As we’ve discussed, digital messages are not subject to the same weekly limit as phone calls, but the absence of a specified maximum in the rulemaking means that individual courts are free to decide for themselves where to draw the line for what constitutes harassment or abuse.
Similarly, state laws concerning debt collection may be at odds with Regulation F, and federal “safe harbor” provisions may not be applicable if an action is brought under the corresponding state law. Even at the federal level, compliance with Regulation F will not necessarily be recognized as equivalent to compliance with the FDCPA as a whole.
In short, always seek legal and compliance advice when considering changes to your collections workflows.
Consumer Pushback
While consumers report an openness to debt-related digital communications in surveys such as the McKinsey study cited earlier, this does not necessarily mean that messages received through social media will be well-received. Consumer advocates have sharply criticized the new rules, and it’s reasonable to expect that debtors themselves will be divided on the issue: some may welcome communications through a form other than phone calls, while others will consider this form of messaging an invasion of their privacy.
This may be significant for first-party creditors. If they already use social media – and even direct messages – for marketing purposes, using the same channel for debt-related messaging is a natural evolution. Yet if debtors object to the messages, or if the style and tone of the messages conflict with the creditor’s usual branding, it could result in reputational damage.
Realizing the Potential of Digital Debt Collection
Omnichannel strategies have become commonplace within the marketing industry, and the advent of Regulation F has made it possible for the collections industry to follow suit. Digital communications channels, including social media DMs, provide a means of establishing contact with debtors who have become difficult to reach through the traditional methods of physical mail and phone calls.
For these channels to reach their full potential, data tools must also evolve. The existing ecosystem of legacy data providers was finely tuned to address collections by phone and mail, but effectively leveraging digital communications requires newer, nimbler tools like Spokeo for Business.
For a closer look at how Spokeo for Business can upgrade your existing collections process, or to arrange a demonstration or free trial of the product, reach out to our team using the contact information on our Debt Collection/Skip Tracing page.
Disclaimer: The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only.
American Bar Association: Six Things Creditors Should Know About the New Federal Debt Collection Rule
McKinsey Company: The Consumer Mandate to Digitize Collections Strategies
TransUnion: Collections Industry Increasing Communications Channels, Diversifying Areas of Business
Lexology: Final Debt Collection Rule Issued by CFPB
InsideARM: Compliance with Reg F is Not the Same as Compliance With the FDCPA, Says Court
National Consumer Law Center: CFPB Debt Collection Rule a Mixed Bag for Consumers