Protect Yourself from Debt Shaming Collection Tactics

A person with the word debt all around them looking at their phone with a discouraging look about the debt shaming.

One controversial tactic in debt collection is a relatively new term, debt shaming. This involves some level of public disclosure by the collector to bring attention to a debtor who has not satisfactorily paid their debt. More often, this tactic is a humiliating experience for the person(s) who is already struggling with their debt. If you think you are being debt shamed, it’s important to know the facts about what is and is not permissible and what to do if you are a victim.

Public Shaming: What is “Lunch Shaming?”

The topic of public shaming came to national attention in 2017 when New Mexico passed a state law banning “lunch shaming.” This involved a school that was publicly stigmatizing students because their parents hadn’t paid their school lunch plan payment.

Students faced a variety of consequences when their parents had unpaid meal debt: some were denied lunch, while others were given a different meal than all of the other kids. However, being fed cheese sandwiches while the other kids ate pizza was not the only way these kids were publicly identified. Some were given hand stamps; others were forced to wear a bracelet to identify they were delinquent on their lunch payments. In some instances, the children were actually made to do work for their lunch, wiping down cafeteria tables in exchange for school food. Identifying and using children in this manner is a deplorable instance of shaming.

As a result of the outrage surrounding this humiliating and demoralizing action, New Mexico banned the practice of lunch shaming earlier this year. The USDA also enacted a new policy that took effect on July 1, 2017, requiring states to clarify their policy on this matter in writing. It’s expected that more states may follow New Mexico’s lead, with Texas and California already introducing anti-shaming legislation of their own. However, some states may leave that decision up to local school districts.

Public Debt Shaming

More than likely, you’ve seen places that displayed bad checks of customers who paid by check and the payment didn’t clear the merchant’s bank—this form of debt shaming has been around for decades.

This is where we enter into murky waters. While it’s improper under the Fair Debt Collection Practices Act (FDCPA) to publicly disclose a person’s debt, a bounced check isn’t really defined as a “debt,” therefore the stores can get away with displaying them.

With fewer places accepting checks these days, this type of debt shaming is on the decline. In its place, however, is a rise in social media focused shaming. The good news is that the majority of debt collectors do follow related laws and refrain from this activity. Individuals or small companies, however, who may not be fully aware of debt collection laws may turn to social media to attempt to collect a personal debt or unpaid bill for services rendered.

However, there are a number of other types of unpaid debts that inadvertently lead to a level of public shaming. For example, bankruptcy filings, foreclosure notices and delinquent tax liens are filed with county recorders offices as they are required to provide public notice to ensure that all potential parties impacted by the delinquent debt are sufficiently notified. Some states actively publish online the names of people with delinquent tax debt and foreclosure sale notices are often published in local periodicals. In many Home Owner Association (HOA) agreements, it is stated that your failure to pay will be disclosed to the other members of the association.

Social Media Debt Shaming

A very public way of debt shaming is to post information on social media outlets.

If a shaming target can prove the claims are not true, s/he could take action against the defamer. So anyone thinking of employing debt shaming on an individual publicly should be very careful in their wording and approach.

Responding to Debt Shaming from Debt Collectors

If anyone–individual, service provider, or any other type of debt collector–publicly discloses and attempts to collect their debt via social media, start with a written request to demand that it be removed immediately. Do however, keep copies of the posts as well as every correspondence you have about the matter.

If your requests go unanswered and posts are not removed, report the activity to the company that runs the site. Social media companies are becoming ever more responsive to situations where people are publicly threatened or harassed online, and it’s likely the offending post will be removed, and the account of the debt shamer could be suspended.

You can also submit a complaint to the Federal Trade Commission and Consumer Financial Protection Bureau about the situation. Another option is to thoroughly research local and state laws to determine if there has been any violation against you. If you are confident that there has and you are considering the possibility of pursuing a claim, the next step would be to speak with an attorney, who may help you understand all options and pursue a judgment if you decide that is the best course of action for your specific situation.

To avoid and eliminate all aspects of debt shaming, the best action is to proactively manage your debt and to take action before a debt goes unpaid.

Personal Shame

Perhaps more often than personal debt shaming, private shame over debt is a much more common occurrence. We know from over four decades of service to individuals and families, many of which are struggling with excessive debt, that people naturally feel great shame over their debt situation.

We want people to know that their situation is not unusual. We’ve helped over 5.2 million consumers over the four decades, and we know that a majority of Americans can empathize with someone facing financial difficulties, including debt problems.

Just talking to someone about your circumstances can help you understand how bad your situation really is, and in our experience, it’s usually not as dire as people think. There are always options to recover from excessive debt levels, and an experienced and compassionate financial educator and debt coach can help you find resources and develop a clear plan to address and improve your financial situation. Credible and reliable non-profit credit agencies have actually worked with countless people in similar situations, and can offer support and advice without criticizing and passing judgment.

One thing we’ve learned over the years is that making people feel bad about their debt situation is simply ineffective. When you’re wallowing in shame over unpaid debts, it’s impossible to take action to address them. But when you proactively take action, come up with a plan and resolve to tackle your debts, you have far less reason to feel ashamed.

If you have debt and you’re struggling to keep up, call us at 1-800-431-8157 or contact us for help. We’ll help you understand your situation and give you expert advice for getting on the road to financial freedom.

Disclaimer: does not offer legal or tax advice.

Article written by
Melinda Opperman
Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined in 2003 and has over two decades of experience in the industry.

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