Michelle Dunn recalls a sad, all-to-common story about a man who lost his job, stopped receiving unemployment compensation, and couldn’t make his loan payments.
Her colleague, a collection agent, would call the man from time to time to see if his circumstances had changed and to set up a repayment plan. But—alas—times remained hard.
Then the collection agent visited the man’s Facebook page and saw a new profile picture: The man enjoying himself immensely on a new boat.
On his next call, the collector mentioned the Facebook page and said, “You tell me you’re not working and you can’t afford to pay $25 per month on your loan. Is that because you have a new boat?”
Social Media & Collections: Seven Tips
1. Use private e-mail addresses when contacting members.
Source: Michelle Dunn
After a moment of shocked silence, the man hung up. But three days later, the collector received a check for the balance of the loan.
This example demonstrates the power of using social media sites such as Facebook, MySpace, and LinkedIn to aid collection efforts, Dunn says. But as technology bypassed collection regulations, questions remain about how to use these tools appropriately.
Dunn’s chief advice: Consider social media a “view-only” resource.
“It’s not a place to post messages to members who owe money,” she says. “That’s not ethical or a good way to keep your members happy—and get paid. You’re not supposed to disclose a debt to anyone but the person who owes the money.”
Posting messages with members’ personal information could lead to privacy violations. Some collection agencies have gotten into trouble by setting up fake profiles and attempting to “friend” debtors.
“Credit unions should be aware it’s ok to use this public information that’s free to everyone—but not for contacting members,” she adds. “I can’t stress it enough: Keep it view-only to stay out of trouble.”
Next: How to go about it
How to go about it
Even in view-only mode, social networking sites can yield a treasure trove of information, Dunn says. She advises taking these steps to mine the most valuable nuggets:
• Be familiar with the Fair Debt Collection Practices Act (FDCPA). Although this federal law governs third-party collectors (credit unions are first-party collectors), it can serve as a guideline for credit unions. Plus, many state collection laws are modeled after this act, Dunn says.
She expects the Federal Trade Commission (FTC) to modify FDCPA—written in 1978—within a couple years to account for new technology, including social media. “FTC is looking into what to change and how to change it, namely to protect consumers but also to demonstrate how collectors can comply and still use this public information in an ethical and fair way.”
• Implement guidelines—if only a short list of bullet points—outlining how you’ll use social media in your collection efforts (i.e., not posting messages on someone’s Facebook wall).
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• Select one person to glean information from members’ social networking sites, and set a time limit for this activity. “People can really get sucked into social media,” Dunn says. “So limit this to one hour a week or an hour a day depending on your credit union and how much volume you have.”
• Verify that you have the right person. Check the information you already have. Do the city, state, address, and/or phone number mesh with the person in question?
“There could be 50 Facebook pages for ‘Michelle Dunn;’ make sure you have the right one,” she says.
• Look for new phone numbers, addresses, places of employment, and other information, especially if the person’s phone has been disconnected or their mail is being returned. Also, check out the person’s photos in case you need to serve them with papers.
• Search second-tier social networking sites. There are many social networks for certain industries and interests.
“These sites provide more places to look for information,” Dunn says. “Often, Twitter accounts will list a description about the person and a web address. Sometimes this is their employer’s website or another social networking site."
Collections clients often ask Dunn which social network provides the best information. Her answer: It depends on your membership base.
“Some of my clients have customers that are 20 to 30 years old, and most of them are on Facebook and MySpace—but not LinkedIn,” she says. “You just have to determine where they hang out the most.”
Dunn continues to be amazed by how much information people share online.
“People really post their whole lives on these sites,” Dunn says. “They go into great detail. A lot of my clients are having great luck verifying information and getting new information on accounts that have skipped.”
She says some financial institutions now use social networking sites when making credit decisions: Verifying employment, home ownership, and other credit application information.
“They’re looking to see if everything matches up,” Dunn says. “They want to catch problems before extending credit.
“Social media is a great tool if you’re smart about how you use it,” she continues. “You don’t have to travel anywhere to get information, and it’s free.”