If you’re a collection agency or creditor in New York, you need to be keeping an eye out for Senate Bill 3803. This bill was introduced to the state senate in February of this year, and the crux is that if approved, debt collectors would be prohibited from using social media to contact debtors. But what does this mean exactly, and what are some of the ambiguities associated with the proposed legislation? Let’s take a look at the actual text!
How Is Social Media Defined?
Senator Kevin Parker introduced the bill as a response to news reports of debt collectors using social media to contact debtors, and posits that this is an invasion of privacy. But what is meant by the term ‘social media?’ Here’s what SB 3803 says:
[Principal creditors or agents may not] “use a social networking website as a means to collect on a consumer claim from a debtor. For purposes of this subdivision, ‘social networking website’ means an internet-based service that allows individuals to (A) construct a public or semi-public profile within a bounded system, created by the service; (B) create a list of other users with whom they share a connection within the system; and (C) view and navigate their list of connections and those made by others within the system. Provided, however, that ‘social networking website’ shall not include electronic mail (e-mail).”
A quick read of this text automatically brings some major platforms to mind: Facebook, LinkedIn, Twitter, GooglePlus, etc. While there is some precedent for agents in the ARM industry to use these sites for location data, there are varying opinions on whether they ought to be used for contacting debtors.
Who Does This Affect?
Original creditors, consumers, and collection agencies are obviously the people most impacted should the New York bill become law. The law does not address exactly how state boundaries would apply, either. Does it only protect New York residents? What if the creditor is in New York, but the debtor has since moved? What about platforms like Pinterest, Instagram, etc? Clearly, there is a lot left to be hashed out, and hopefully that process happens as the bill winds its way through the legislature. More guidance is critical so that creditors, collectors, and consumers alike can navigate the world of debt collection.
Unintended Consequences for Debt Collectors
If this bill is passed, collection agencies and debt collectors will be pressured to rely more on email and phone calls than before. But the use of phone services is increasingly being regulated as well, and this can paint the ARM industry into quite a tight corner. For instance, a recent report by the Federal Communications Commission indicates that the Telephone Consumer Protection Act (TCPA) is about to get a lot more stringent. Consumer protections are obviously important, but it is also critical that legitimate businesses be allowed to operate effectively and that payment for services rendered is received. If more states follow New York’s lead, the resulting legislation could make it nearly impossible to conduct legitimate debt collection without fear of a lawsuit.
In short, SB 3803 has the potential to make a huge impact on the accounts receivable and consumer protection industries, especially for debt collection in New York. It also has the potential to set precedent for other states to follow, and this may or may not be welcome news. Who knows how this social media ban bill will turn out? Be sure to check back at our blog, where we’ll continue to keep you updated of important news, events, and other pertinent information!