Debt Collection and Social Media

Image via Businessinsider.com

No one can dispute that the economy is heavily reliant on the debt collection industry. The economy won’t be in the pink if many businesses won’t hinge on the repayment of credit to pay for facilities, salaries, taxes, and other expenses. That’s why when times get harder, debt collectors become more aggressive in pursuing debtors. These days, creditors and collectors turn to the new means of reaching debtors—through Social Media. 

What really is Social Media?

As Wikipedia puts it, “Social Media refers to the use of web-based and mobile technologies to turn communication into an interactive dialogue.” Social networking sites such as Facebook, Twitter and LinkedIn commonly identify Social Media. However, other forms such as blogs, podcasts, pictures, videos, and social bookmarking also fall under the broad umbrella of Social Media.  

According to a report by Pew Internet & American Life Project, 65% of adult users are into social networking sites. Because of the high penetration rate, the drive of falling back on social media is too intense to ignore. 

But what can debt collectors really do in social media?

There are actually three reasons you may consider before taking the plunge into social media: to locate, communicate, and even accept payments from consumers.  A simple search on these platforms could yield vital information such as the current location and employment details of the debtor. The use of the “Big Three” in social media such as Facebook, Twitter and LinkedIn depends on the type of debt. Facebook appeals more to the younger segment, while LinkedIn is the working class’ hangout.

Downbeat consumers

Not everyone agrees that consumers should be reached through social media. Consumers and consumer protection groups alike are wary about the increasing number of collectors who turn to social media. 

However, nothing can really stop you from using social media in your collection efforts, not even the Fair Debt Collection Practices Act which was passed in 1978. Making false statements and harassment are forbidden though. You cannot just claim to be someone else when connecting to consumers online. Just don’t cross the line.

In line with this, the Federal Trade Commission is soon to release guidelines that will tell you about the dos and don’ts when it comes to the use of social media. On the other hand, The Association of Credit and Collection Professionals has already outlined the blueprint for Modernizing Debt Collection that proposes the removal of barriers to effective communications between consumers and debt collectors. 

More than just collections

Using more tools is essential for the debt collection industry. But more than successfully collecting what businesses rightfully own, social media use can be your own way of making PR work. Quite a few times you would find a bunch of negative tweets on Twitter. Although you don’t really need to engage consumers, responding to one or two of their questions or bad comments can really make a difference. 

Reaching consumers through social media will also make communication more effective. It will allow consumers to know the accurate details about their debts and their options directly and fast. This could even help both parties reach agreements without having to go through tedious and more costly settlements.