Will Facebook Add a Chapter to Financial Reform?

By Jackie Cohen Comment

Debt collectors have a tough job in any type of economy, but apparently desperate times lead to desperate measures: Using Facebook to contact the relatives of a creditor has sparked a lawsuit in Tampa, Florida.

Attorney Billy Howard of Morgan & Morgan in Tampa, Florida has filed the first motion in the country to stop a bank collector from using Facebook to contact the relatives of a creditor, he said in a telephone interview.

The case filed in August goes before a jury presided over by Judge Douglas W. Baird of Pinellas County on January 19, 2011 — pretty quick timing, given the size of most courts’ waiting lists, the attorney said.

“Right now we have a statute that allows companies to operate ethically and it also prohibits companies from doing anything that’s harrassing, and although there’s no definition of what harrassing is… we have a broad area of law that allows you to go after people,” he said.

According to the Federal Trade Commission’s own website, debt collectors can’t overconfide to other individuals about your debt. Technically these companies can contact people to try to reach you, but may not mention the exact amount of money owed. Here’s what the FTC says:

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

The attorney in this case represents Melanie Beacham, who had become delinquent on her car loan after taking a medical leave from work.

As if there weren’t already enough strange components to this case, Beacham’s attorney said that the lender continued to pursue Beacham after her account was paid in full. It sounds like interest payments, or other late charges, might be disputed in court.

Now if you tell any kind of debt collector to stop calling you, by law they are required to do so. I point this out because a story run by the local Tampa Bay WTSP 10 News said that Beacham got 20 calls a day from MarkOne Financial — that hardly sounds like a profitable activity for the lender, but I digress. If at any point she’d told the collector not to call again, current law still allows for family or friends to get contacted next.

Howard said he believes that if a lawsuit or other legal action didn’t happen, using Facebook to track down creditors’ loved ones could become the norm. “They already know where the person is and how to reach them, but they contact your family to set off a panic, ” he said.

While the defendant in this case isn’t technically a collections agency, but rather a servicer of the plaintiff’s debt, the financial motivation behind the aggressive pursuit has things in common: The collectors earn their keep based on a percentage of the outstanding balance, only if it gets paid.

The most recent recession has most definitely included some record-setting amounts of bad debt. And that’s what makes the lending community desperate enough to stake people out on Facebook.

Readers, do you agree with Billy Howard about the potential for Facebook to become a means for debt collectors to track down creditors? Will there come a day when all lawsuits include evidence from the social network?