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Read articles on debt collection written by Carlo Pegna

Debt Collection and Social Media - How it May Help Nail Your Debtor (Case Study)

This Case Study demonstrates how information in the public domain published on Social Media can assist with debt collection. Master Collections helped a client successfully challenge an application to set a default judgment aside with the help of LinkedIn.

The Client supplies sales and marketing data to businesses through an annual subscription.

Although the debtor agreed to the Client’s annual subscription at a price of £3,360 and downloaded 275 data items within the first 7 days, he claimed he gave notice of cancelation consistent with his rights under the Consumer Protection (Distance Selling) Regulations 2000 and therefore was not liable to pay the subscription fee.

Master Collections advised the Client despite the debtor giving notice of cancellation as alleged the merits of a legal claim were good. As a result on our advice the Client issued a county court claim for recovery of the debt.

Due to the debtor failing to file their defence on time, the court at the Client’s request awarded judgment in default for £3,638 (the CCJ).

However soon after registration of the CCJ, the debtor applied to set it aside on grounds he had exercised his consumer right to cancel the agreement by giving notice of cancellation within the statutory cooling off period.

How Social Media Helped Challenge the Debtor For a Successful Debt Recovery

With Master Collections' help, the Client successfully challenged the debtor’s application by exhibiting the debtor’s LinkedIn profile demonstrating he in fact is a marketing professional with his own business.

The Judge commented, the debtor did not demonstrate a defence with a real prospect of successfully defending the claim and the Client was entitled to claim costs for unreasonable conduct.

Furthermore, the judge agreed with the Client there was no way of mitigating their loss because the debtor had taken advantage of the service and therefore the Client is entitled to be paid in full. The Judge also considered whether or not the particulars of claim in a short form was sufficient to which he decided it was because the defendant was aware at all times what the claim was about.

There are five lessons from this case: -

  1. A businessman cannot rely on consumer cancellation rights.
  2. If a judgment is awarded as the result of the Defendant failing to acknowledge service or file a defence on time, the Defendant is at liberty to apply to set judgment aside. However in order to set aside judgment the Defendant must demonstrate they have a defence with a real prospect of success.
  3. Although costs for small claims are irrecoverable, if a Judge feels a defendant is making a nuisance of themselves by amongst other things raising a defence that has no merit they will be ordered to pay costs for unreasonable behaviour.
  4. If the defendant has taken advantage of the service to which the claim pertains the Claimant is entitled to be paid in full.
  5. A contract claim can be pleaded as if it is a debt providing the Defendant was aware at all times what the claim is about.

The moral to the story is, depending on the circumstances, Social Media can help businesses challenge spurious claims. Furthermore Social Media has made the world a smaller place making it easier to track down debtors. Only the other day thanks to Twitter Master Collections located a debtor that owes our client £9,000. The debtor boasted on twitter about his new job at a prestigious hotel in Scotland…Gotcha!

For more information on how we can help you recover your business and commercial debts over £650, call us on 01920 481467 today for a FREE assessment