Striving to deliver positive consumer experiences is not just a best practice—it is becoming a more prominent component of compliance in debt collection, especially when it comes to consumer communication. As consumer preferences have shifted toward digital channels, the success of a business’s debt recovery operation (whether in-house or outsourced to a third-party agency) hinges on engagement through online platforms, emails, and text messaging. However, without proper design or planning, digital outreach can cross a fine line becoming manipulative or even deceptive. These practices are known as "dark patterns," and they can cause significant harm to both consumers and businesses. The danger of dark patterns lies not just in the unethical manipulation of users but in the long-term consequences of such tactics, from damaged consumer trust to legal ramifications. But what exactly constitutes a dark pattern in digital communication? Let’s look at the official definitions and examples, the risks they pose to consumers, the consequences businesses can face, how to avoid inadvertent dark pattern design, and how TrueAccord has approached delivering consumer-centric debt collection communications since day one. What Are Dark Patterns? Examples, Risks, & Consequences Dark patterns are design practices that mislead or manipulate consumers into taking actions that do not align with their true intent or preferences. These tactics typically exploit psychological triggers, confusing language, and hidden choices to push users toward making decisions they might not otherwise make. In recent years, dark patterns have drawn increased scrutiny from federal and state regulators. The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have made it clear that such practices are not just unethical but also illegal. According to the FTC, dark patterns are considered "unfair or deceptive" business practices under Section 5 of the FTC Act. In 2022, the FTC published a report titled “Bringing Dark Patterns to Light,” highlighting these manipulative tactics and the growing enforcement against them. The report honed in on four common dark pattern tactics: Burying key terms and junk fees Making it difficult to cancel subscriptions or charges Tricking consumers into sharing data Misleading consumers and disguising ads In addition to the focus areas within the FTC’s report, some other examples of dark patterns in digital communication include: Confirm-shaming: Using guilt-inducing language to discourage consumers from unsubscribing or opting out, such as “Are you sure you want to miss out on this exclusive offer?” Trick buttons: Designing "unsubscribe" buttons to look like "continue" or "learn more" buttons, leading users to click on something they didn’t intend to. Urgency tactics: Creating a false sense of urgency by suggesting a limited-time offer is about to expire, even when it isn’t. Pre-checked boxes: Adding pre-ticked boxes for additional services or subscriptions, requiring users to actively opt-out to avoid unwanted charges. These tactics are not just annoying for consumers—they also undermine trust in the brands that use them. In the context of debt collection, where trust is already fragile, dark patterns can have a particularly devastating impact. Dark patterns can cause businesses to lose credibility, customer loyalty, the ability for communications to get delivered through digital channels, and even revenue. When consumers feel manipulated, they may report a company’s emails as spam, impacting deliverability and overall the effectiveness of digital engagement. The risks of dark patterns go beyond consumer dissatisfaction and lower email open rates—they can lead to significant legal and financial consequences. Various laws, including the Consumer Protection Act of 2019 and regulations by the California Privacy Protection Agency, explicitly prohibit the use of dark patterns in obtaining consent for data collection. Violating these laws can result in penalties, along with further damage to a company’s reputation in the eyes of the consumer. In the long run, the use of dark patterns in digital communication risks creating a negative feedback loop: the more consumers feel misled, the less likely they are to engage with the business, and the less effective digital communications will be. This is why it's crucial for companies to adopt transparent, user-friendly practices. How to Avoid Dark Patterns Avoiding dark patterns is not just about following the law—it’s also about fostering trust and transparency with consumers. Here are some key strategies to ensure your digital communications are free from manipulation: Be Transparent: Clearly disclose all costs, fees, and terms. If there are any charges involved, they should be easy to find and understand. Use Clear, Honest Language: Avoid language that might mislead or confuse consumers. Be direct and straightforward. Avoid Manipulative Language: Never use guilt-tripping or fear-inducing tactics to push consumers into decisions. Simplify the Decision-Making Process: Make it easy for consumers to make informed decisions by avoiding "choice architecture" that limits their ability to make fair choices. Provide Symmetry in Choice: Ensure that privacy-protective options are as easy to select as less secure alternatives. Make it Easy to Opt-Out: Ensure that unsubscribe links or opt-out buttons are clearly visible and easy to use, without hidden steps or confusing layouts. How TrueAccord Leads the Way in Compliant Consumer Communications in Debt Collection At TrueAccord, we take pride in being a leader in ethical and compliant digital communication since our inception in 2013. We’ve always believed that transparent, user-friendly communication builds trust, which ultimately leads to better resolutions for consumers and better repayment rates for businesses. We make a concerted effort to ensure that our communications are free of dark patterns by focusing on both the design and messaging of our digital interactions. Our emails and text messages are carefully crafted to follow modern user experience (UX) standards, ensuring that they are clean, clear, and easily understood. Brand Consistency: Every message we send out follows consistent branding with the right colors, fonts, and logos. This helps consumers recognize us as a legitimate company and reduces the risk of being mistaken for a phishing scam. Clear Messaging: We prioritize clarity in our messaging. We make sure that everything we say is relevant, easy to understand, and free from confusing jargon or manipulative language. Error-Free Communication: We carefully review our content for any spelling or formatting errors. Consumers often make snap judgments about the legitimacy of a message based on visual cues, so it’s crucial to maintain a professional appearance. Easy Navigation: All our links work, and consumers are always redirected to the correct pages. If there’s ever an issue, we flag it quickly to ensure that the consumer experience remains seamless. Compliance and Trust: We are committed to being fully compliant with regulations, but more importantly, we focus on building trust with the consumer. By providing clear, actionable, and honest communication, we can help consumers navigate their debt repayment process more effectively. Moreover, our commitment to transparency ensures that every communication we send out, whether via email or mobile, is accompanied by clear disclosures to further legitimize our efforts and foster a stronger relationship with the consumer. As mentioned above, a lot of the regulations that have come out specifically about dark patterns have been in recent years. But with over a decade of experience in digital debt collection, it has always been our duty at TrueAccord to ensure we are not inadvertently causing dark patterns in communications or any part of the repayment process—not because it’s a compliance requirement but because we know that when a consumer trusts and engages with your communications, you have better liquidation results. Don’t Risk Dark Patterns—Partner with Experts in Collections & Compliance Dark patterns are a serious issue in digital communication, and while they may offer short-term gains, they can have long-lasting consequences on a company's reputation, legal standing, and customer trust. By avoiding these deceptive practices and focusing on transparent, honest, and user-friendly communications, businesses can build stronger relationships with their customers and avoid the legal pitfalls associated with dark patterns. At TrueAccord, we have always been at the forefront of recognizing the importance of ethical communication in debt collection. By prioritizing transparency, trust, and compliance, we not only ensure a better experience for consumers but also achieve better results for our clients. After all, when consumers trust the process, they are more likely to engage and succeed in resolving their debts—making for a better outcome for everyone involved. Ready to partner with an industry-leader in compliant digital-first debt collection? Schedule a consultation today! Sources: CFPB FTC

Over the past several years, federal and state regulators have started raising red flags about a significant trend in the debt collection industry: companies failing to deliver positive experiences for consumers or properly manage complaints and disputes. With growing scrutiny from agencies like the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and even the White House, it's clear that ensuring a good consumer experience is no longer just a best practice—it’s a compliance requirement. As we move further into 2025, it’s essential for debt collectors and businesses to find the balance between adhering to the myriad of regulations while maintaining a smooth and positive consumer experience through the repayment process. And while digital communication channels have become increasingly favored by consumers, mass blast emails and SMS campaigns don’t equal rave reviews or recovery rates. Add on evolving compliance regulations and the modern debt collection challenges mount. While 2024 saw different governing bodies and providers make progress handing down guidelines and best practices for better consumer experience overall, regulations and legislation is still not always 100% clear on what is and is not acceptable for compliance. So how can your debt collection strategy keep up with the 2025 compliance and consumer preference landscape? Let’s look at ways to navigate the challenges and increase liquidation rates as a result. Staying on Top of the Shift Toward a Consumer-Centric Compliance Model Traditionally, compliance in debt collection focused primarily on following established regulations, such as the Fair Debt Collection Practices Act (FDCPA) and Regulation F. However, recent regulatory actions are increasingly examining how businesses interact with consumers beyond the letter of the law and have emphasized that poor consumer experiences can even trigger legal violations. If a debt collector fails to manage complaints and disputes properly, it could result in potential violations of the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) standards, or even the Dodd-Frank Act. Even the use of emerging technologies is being scrutinized through the consumer experience lens: the CFPB has highlighted concerns over poorly monitored artificial intelligence (AI) or machine learning, specifically when it comes to consumer interactions. A poorly designed or maintained automated messaging system can lead to consumers getting “stuck” in automated loops, resulting in complaints and potential regulatory scrutiny or even rise to the level of a compliance issue. Another area of increasing consumer frustration can be the process of opting out from receiving further digital communications. Automated messages that give consumers the ability to remove themselves from receiving further communications by replying “STOP” but do not account for a range of possible opt-out requests or replies can lead to complaints and trigger regulatory action. The lesson is clear: compliance is not just about ticking boxes—it’s about delivering a consumer experience that’s transparent, responsive, and respectful. And with a smart approach, businesses can use technology to minimize compliance risk while enhancing the consumer experience. Best Practices to Strike Balance Between Compliance and Consumer Experience Understanding this focus shift and the nuances of ever-unfolding regulations still leaves us with the original question: how can your debt collection strategy keep up with the 2025 compliance and consumer preference landscape? While it is imperative to follow all laws and requirements in the collections industry, following the best practices below can help your organization prepare and provide the best consumer experience through the delinquency lifecycle as the regulatory landscape continues to evolve: Implement robust compliance oversight programs, particularly when scaling digital outreach efforts Establish clear policies and procedures around the use of AI, machine learning, and other emerging technologies in debt collection and digital communication, and continuously assess their impact Map and monitor outreach across all communication channels holistically, ensuring that consumers do not get “stuck” in a loop or experience any disruption in their communication Ensure any messaging systems appropriately handle variations in opt-out requests (like we mentioned above, “STOP” is just one way consumers might convey their opt out of SMS) Automation can be used not only to send messages but also to ensure that every piece of communication complies with the necessary regulations Partner with debt collection agencies that have experience successfully using digital communications compliantly The key is to adopt a comprehensive approach that blends technology, consumer insights, and compliance best practices. By leveraging digital tools to monitor communications, mapping out consumer journeys, and staying vigilant with AI and machine learning systems, businesses can maintain compliance without sacrificing the quality of the consumer experience. And TrueAccord has a proven track record as an industry leader in digital-first debt collection from both a compliance and consumer experience perspective. The TrueAccord Difference To start, TrueAccord is a licensed, bonded, and insured collection agency in all jurisdictions where we collect. We ensure compliance control, auditability, and real-time updates for changing rules and regulations, as well as adapting to shifting trends in consumer preference and behavior. Our digital collections compliance process is controlled by code, ensuring that all regulatory requirements are met, while still being flexible to quickly adjust to new rules, case law, and consumer experience expectations. Take the example from earlier about consumer frustration trying to opt-out: at TrueAccord, we’ve found that only 7% of consumers use the word “STOP” to opt out of SMS communications—but our team and machine learning engine, HeartBeat, account for the many other phrases consumers may use to opt-out, staying compliant and reducing consumer friction. It’s important to remember that most compliance rules were written for the benefit of consumers. As we’ve seen from today’s consumer-centric compliance guidelines, the better we comply, the better the consumer's experience should be. Ready to partner with an industry-leader in compliant digital-first debt collection? Schedule a consultation today!

Direct mail is the old-school method for reaching consumers regarding their debt, but over time several factors have reduced the effectiveness of letters in collection communications—consumer preference and cost being the most prevalent. But specific state compliance regulations and other use cases prove that “snail mail” still has its place in the omnichannel mix. When are Letters Necessary in Collection Communications? While the cost of physically mailing letters may be a deterrent to snail mail, businesses benefit when direct mail is used to meet compliance requirements. We’ll go into more detail around regulations in the next section. Another benefit of mailing letters is most apparent when the delinquent account does not have a valid email address or phone number on file. Letters ensure that these individuals still receive crucial notifications regarding their accounts, preventing any potential oversight, and provide essential information related to their debt in a clear and organized manner. Additionally, the formality of letters can be necessary to help raise awareness of outstanding debt for consumers that may not be as trusting of digital communications and choose to ignore phone calls. This is especially true for those who may not be as computer savvy or familiar with online financial transactions. And just like with all other communication channels in debt collection, consumer preference also plays a role but in an even greater way with traditional letters: if a consumer clearly states that they only want to be contacted through physical mail (either to them directly or to their legal representation), businesses and collectors must abide. These types of requests lead to the main use case for letters… The Main Use Case for Snail Mail: Compliance The primary use case for using the direct mail channel is for compliance. Several laws, regulations, and governing bodies—including the Fair Debt Collection Practices Act (FDCPA), Regulation F, Consumer Financial Protection Bureau (CFPB), among others—define how, when, and what needs to be included in consumer communications around debt collection, and letters were the original initial compliant consumer communication. Yet the prevalence of digital has forced these regulations to evolve, and today there is no federal law requiring consent to communicate via email vs direct mail. But there are some exceptions to this general rule: Some states/jurisdictions require consent to communicate via email and text, which must be obtained through physical letters and documentation. In some instances, consent to send legally required notices electronically must also be obtained through physical mail. Some states require certain legally required notices to be mailed. See Success and Real World Results with TrueAccord Understanding the nuances of compliance and when communications fall under certain laws can be challenging without legal experts keeping a finger on the pulse of these evolving regulations—but TrueAccord ensures success with code-based compliance so all our engagement channels meet the requirements for each unique account’s circumstance and know when letters are the right choice for outreach. While our omnichannel strategy is digital-first, we understand that digital isn’t always the best or most viable option to connect with some consumers. Knowing when, where, and why a letter might be the ideal choice for consumer communication helps TrueAccord and our clients remain compliant and cost-effective. Depending on a consumer’s location and contact information, a letter may be the best bet to garner engagement. With advanced code-based compliance and scrubbing capabilities, TrueAccord’s omnichannel approach proves even snail mail can still be effective in collections. Want to know more about how the omnichannel approach and how each channel influences the effectiveness of a business’s overall collection strategy? Download our new eBook, Omnichannel Communication in Debt Collection: An In-Depth Look at Advanced Engagement Strategy by Channel now»»

Keeping up with compliance in the debt collection industry can be a challenge—especially as artificial intelligence, machine learning, and other advanced technologies sweep through both the business and consumer sectors. In a webinar on January 29, 2025, industry experts Kelly Knepper-Stevens, TrueML Chief Legal Officer; Katie Neill, TrueAccord General Counsel and Chief Compliance Officer; and Lauren Valenzuela, Retain by TrueML Products General Counsel and Chief Compliance Officer, shared insights from 2024 and influences on 2025. Let’s take a look at the takeaways from the webinar: Compliance & Regulatory News in 2024 One significant trend coming out of the regulations and consent orders in 2024 was focused around companies’ failure to deliver a positive experience for consumers, with federal and state regulatory action against companies who fail to properly manage complaints and disputes. The White House, Consumer Financial Protection Bureau (CFPB), and Federal Trade Commission (FTC) all shared concerns that poor customer experiences may rise to the level of illegality. October 2024 saw the opening of the CFPB’s nonbank registry, aiming to create a single database of any nonbank entity that's received a consent order by requiring these entities to register when they have become subject to certain final public orders imposing obligations on them based on alleged violations of specified consumer-protection laws. The Department of Justice (DOJ) revised their Evaluation of Corporate Compliance Programs​ to include new areas of focus like technology risk, merger and acquisition integration, and additional questions related to autonomy and resource allocation and anti-retaliation programs. It places significant emphasis on the need for companies to implement structured processes to assess and manage risks tied to AI and other emerging technologies. These updates underscore the need for organizations and individuals subject to compliance measures to have a competency level when it comes to artificial intelligence and all of the various tools and solutions that may be used or inadvertently used through vendors. Additionally, last year email service providers began to roll out their own requirements, like Google's one-click unsubscribe in June 2024, which may negatively impact email sender reputation if not adhered to. While this is not the law, not following this requirement can lead to business emails missing the inbox and landing in spam instead—a major risk for deliverability and consumer engagement. Another digital channel got an update to best practices beyond direct Fair Debt Collection Practices Act (FDCPA) or Regulation F guidelines as well: the Federal Communications Commission (FCC) published an order in February 2024 requiring companies using an automatic telephone dialing system (ATDS) for text messages to honor opt-outs within 10 business days of receipt. Currently the FDCPA doesn’t outline any type of processing time to opt-outs, but the FCC order does provide a new standard for industry best practices. What Do These Compliance & Regulatory Updates Mean for 2025? A key takeaway from all the many updates and introductions in 2024 is that not only should organizations make sure they are compliant with the law, but also look at the quality of the consumer's experience as companies evaluate their compliance programs. And while last year saw different governing bodies and providers make a lot of progress handing down guidelines and best practices for better consumer experience overall, our experts expect the next wave of successful new regulations to come from the states versus the federal legislation. That said, a particular proposal from 2021 has been reintroduced on the federal level, but is not expected to pass out of the House Financial Services Committee—which is a good thing for consumers and collectors alike when it comes to digital communications. Rep. Maxine Waters’ proposed debt collection legislation covers many articles, but the concerning portion focuses on introducing a nationwide prohibition from debt collectors reaching out to consumers by email and text message without the consumer's consent first, which is ultimately a ban on those channels because it's difficult to get a consumer on the phone to get them to opt in to those channels or to get them to respond to a letter. While it is not expected to pass, it is a prime example of the misunderstandings around these technologies and emphasizes the need to educate and advocate for digital adoption because consumers largely prefer these sorts of methods. Overall, businesses and collectors need to strike a balance in 2025 between maintaining compliance while also keeping up with consumers’ more digital preferences despite regulations and legislation not always being 100% clear on what is and is not acceptable for compliance. With that, one of the biggest opportunities and challenges for organizations and collectors in 2025 will be how to vet, adopt, and ensure compliance with exciting emerging technologies. Emerging Technologies: Benefits, Risks, and Looking Ahead at 2025 Think about ways that you can use technology to help you work smarter, better, faster, but also where pitfalls might be with that technology—this is the mantra moving forward. With technology getting smarter, especially for the digital communication landscape, it's significantly less expensive to send emails and SMS than it is to mail letters or place phone calls. It’s safe to say that if your organization is already utilizing digital channels, you will probably send more communications through those channels in 2025, which could expose some of the greater compliance risks in the new year without the right compliance programs and strategies in place. While consumer preferences consistently lean more towards digital, not all digital engagement is created equal—and poor consumer experience can be the result of poorly designed, implemented, or maintained digital outreach. And as noted above, a significant focus for staying compliant in 2025 hinges on consumer experience. In 2024, the CFPB identified one of their concerns over utilizing technology like AI is a lack of oversight, or even understanding of how to properly use it in consumer communications. There hasn't been any federal laws yet regarding the AI in debt collection, but federal agencies have put out significant guidance on using these advanced technologies and what sort of protections businesses need to have in place over them. The Department of Treasury is very interested in how organizations are using the AI technologies with several large sessions bringing in industry members and government regulators to talk about the risks and the benefits and what sort of controls would be best to put in place. While legislation and explicit regulations may still be in the works on a federal level, businesses should start to prepare now to find both higher chances for success and compliance in 2025. In a webinar poll, we found that when asked “Do you allow your employees to use LLMs like ChatGPT or Deep Seek?” attendees responded that 70% said a flat no, followed by 17% saying a straight yes, 3% unknown, and only 10% yes after they are vetted by info-sec and legal teams—we expect that 10% to grow exponentially further into the year as AI technologies become not only more prevalent and more accessible, but also more scrutinized on a business-level. One key directive any business should take away: start writing policies and procedures about this, including putting these sorts of things into your risk assessment annually, at least to be assessing whether or not this is bringing more risk than you want to your organizations. While using these emerging technologies does open organizations up to a new set of risks—both in compliance and overall consumer experience—using digital avenues for outbound communications can similarly be used for how your business manages compliance oversight of your processes. If you're leveraging an omnichannel engagement strategy, it can be default to view each channel in isolation, but there are compliance solutions that help map out and monitor your outreach across channels. It is crucial for the positive consumer experience—and in turn, compliance—to make sure consumers aren't getting stuck anywhere in your engagement process, to make sure your responses to your outbound digital communications are being scanned for different keywords and phraseology, just to name a few of the modern compliance elements. Can Your Business Future-Proof Its Compliance Program? As we saw in 2024, compliance and best practices can change rapidly but can also lag behind emerging technologies. Some of the best ways to future-proof your compliance strategy is to pull insights from the recent past, and 2025 has plenty to draw from. But one way to take some of the pressure off internal teams trying to keep up with compliance is by partnering with industry experts with a proven track record of being ahead of the curve—and in TrueAccord’s case, even helping influence them. Our perspective since our company’s inception in 2013 has been that legal compliance is at the forefront of understanding the future of the collections industry and what it means to prioritize consumers. TrueAccord is a licensed, bonded, and insured collection agency in all jurisdictions where we collect. Our legal team follows developments in regulations and case law to develop policies and procedures according to their constant changes. We ensure complete compliance control, auditability and real-time updates for changing rules and regulations. Our digital collections process is controlled by code, ensuring that all regulatory requirements are met, while still being flexible to quickly adjust to new rules and case law. Ready to partner with an industry-leader in compliant digital-first debt collection? Schedule a consultation today!

With consumer preferences leaning more and more towards digital communications, it can be easy to consider call centers for debt collection as a thing of the past. In fact, the first prediction of call center demise came in the year 2000 “Death of the Call Center”—but don’t completely cross off calling to recoup delinquent funds. Phone calls serve a valuable purpose in a fully omnichannel approach, in more ways than you may think… The Differences Between Outbound vs Inbound Calling—And Why Both Are Crucial in Debt Collection If your call center agents are only dialing out to reach delinquent consumers, you are missing out on opportunities to answer the phone for consumers ready to talk. Known as outbound vs inbound calling, both functions are vital components to a comprehensive omnichannel strategy. So what’s the difference between outbound vs inbound calling? OUTBOUND: Call center agents dial out directly to consumers INBOUND: Call center agents answer incoming calls made by consumers Whether agents are dialing out or answering the phones, calling has been a cornerstone of debt collection communications for decades, and its primary objective remains the same: recover owed money, negotiate and resolve issues, and arrange commitment for repayment plans. Even when consumers are conducting more and more financial transactions online, phones still have specific use cases businesses can’t afford to ignore when collecting debts. Use Cases and TrueAccord Success Stories Calling as part of the debt collection communication mix may be considered the old-school method, but its use cases remain relevant today: Lack of email or digital contact information Acquiring consent for digital communications where required Reaching consumers unresponsive to digital outreach Follow up on failed or missed payments And there are important use cases on the flipside of the phone line too. Allowing consumers to initiate contact through inbound calling can create a more accessible and manageable situation for consumers to negotiate repayment plans, particularly for those dealing with complex issues or disputes. At TrueAccord we are digital-first, but not digital-only. By providing phones as an active channel for engagement, we are able to reach consumers who may otherwise slip through the cracks of digital communication and support a wider range of consumers, empowering them to resolve their financial obligations effectively and recover delinquent funds more efficiently. “Thank you for working with me. TrueAccord is an amazing agency. Very flexible—just give them a call.” - Real consumer feedback Want to know more about how the omnichannel approach and how each channel influences the effectiveness of a business’s overall collection strategy? Download our new eBook, Omnichannel Communication in Debt Collection: An In-Depth Look at Advanced Engagement Strategy by Channel now»»

For consumer engagement in debt collection, many organizations and agencies have moved away from outbound calling—but don’t discount reaching out to consumers’ phones just yet! Text messaging (referred to as SMS or short message service) is becoming a favored method for consumers to receive business communications. It’s common knowledge these days that people tend to ignore phone calls from unknown numbers and often throw away physical letters without opening them, but they will also delete unfamiliar emails without reading them, too. So if your digital communication strategy only includes email, consider this: consumers are nearly twice as likely (1.8x) to prefer texting to any other communication method. Gartner reports SMS open and response rates as high as 98% and 45%, respectively, compared to corresponding figures of 20% and 6% for email. For successful debt collection operations, adding SMS into the digital mix to build an omnichannel approach (along with email, calling, letters, and self-serve options) boosts engagement and liquidation rates. Why is SMS Critical in Collection Communications? SMS allows creditors, debt collectors, and financial institutions to communicate with individuals in a brief and direct manner, more so than traditional methods such as letters or phone calls—or even email. SMS is a powerful tool for debt collectors looking to engage with consumers who might otherwise avoid other forms of communication. These messages can serve a variety of purposes, from notifying debtors of outstanding payments to reminding them of upcoming due dates or offering payment plan arrangements. SMS offers several practical advantages for both debt collectors and consumers. The concise nature of SMS—limited to 160 characters—forces communication to be direct and to the point, ensuring that messages are clear and easy to understand. Consumers who may feel overwhelmed by lengthy phone conversations or complex emails often appreciate this streamlined approach. Surveys have found that 85% of consumers state that they prefer to receive an SMS instead of an email or phone call and more than 55% said they prefer text messaging because it's immediate, convenient, and allows them to quickly get updates—and that’s just the beginning of consumer preference statistics surrounding SMS communication: 65% want their accounts, billing, and payment reminders sent to them as a text 89% say they prefer texting with businesses over any other mode of communication 97% of companies that have launched texting initiatives say those initiatives help them communicate with consumers more efficiently And studies of overall communications from businesses show that consumers are 134% more likely to respond to a text than an email. Use Cases and TrueAccord Success Stories According to the Pew Research Center, 97% of Americans own a cell phone, and nearly the same percentage sends at least one text message each day, making SMS an already well-established communication method most consumers are familiar and comfortable with. By using SMS to reach out to delinquent consumers, debt collectors tap into a channel that’s not only widely accessible but also highly effective in terms of response and engagement. With its speed, convenience, and familiarity, expanding digital strategies to include SMS is critical for consumer preference. Along with this preference and the corresponding better engagement rates, compliance is one strong case for using SMS in consumer engagement for collections. The implementation of Regulation F by the Consumer Financial Protection Bureau (CFPB) has helped modernize the Fair Debt Collection Practices Act (FDCPA) by focusing on electronic communications and giving guidance on how to properly use SMS as a channel. SMS provides consumers with links directly to account portals where consumers can get more information, pay, dispute, etc. at a time that is convenient for them and without having to talk to an agent. “This is my first time paying off a debt collection online by just receiving a text. I just received a text from the debt collector and I made a payment arrangement just by a few clicks. This way is just so much better and easier.” - Real feedback from consumer working with TrueAccord Positive consumer feedback is just one part of the TrueAccord difference for this channel. TrueAccord goes beyond just adding SMS into the mix—our team digs deeper to ensure the best possible engagement in this channel. Similar to email deliverability, TrueAccord teams track SMS reachability, or the likelihood that a text message sent by a business actually reaches the intended recipient's mobile device. And just like with every approach in our omnichannel strategy, our machine learning decision engine, HeartBeat, guides optimal communication with the right message, right time, and right channel. From reminders to direct calls-to-action, SMS offers many benefits for both consumers and businesses thanks to the speed, convenience, and higher engagement rates towards debt resolution. Want to know more about how the omnichannel approach and how each channel influences the effectiveness of a business’s overall collection strategy? Download our new eBook, Omnichannel Communication in Debt Collection: An In-Depth Look at Advanced Engagement Strategy by Channel now»»

Looking at key economic indicators—GDP growth, consumer spending, softening inflation and a healthy job market—it would be easy to deduce that consumers in America are faring well. But digging deeper reveals unwieldy debt, expected rises in charge-offs and uncertainty around future economic conditions, painting a less rosy picture of the financial situation.  Consumers certainly faced challenging economic conditions in 2024, but despite record-high credit card balances and delinquency rates, Americans continued spending, accumulating even more debt this holiday season. Data shows that more than a third of shoppers took on additional debt for the holidays, borrowing $1,181 on average, and that 47% of consumers still carried debt from the 2023 holiday season. With inflation proving more sticky than policymakers had hoped and uncertainty around how the new administration’s policies might affect it, it may take longer for people to see lower interest rates on their mortgages, car loans and credit card balances, which could prove challenging to household budgets. The good news for lenders and debt collectors is that a reported 72% of consumers have a New Year’s resolution to pay off debt in 2025. The challenges will be effectively engaging consumers who want to repay and accommodating their strained budgets. We are entering a year of unknowns across the board, from potential regulatory changes to economic fluctuations to varying consumer sentiments, and there’s a lot to consider as it relates to debt collection in 2025. What’s Impacting Consumers? While inflation isn’t cooling dramatically, it also isn’t showing signs of speeding back up. December’s inflation reading didn’t bring any big surprises to close out 2024—the consumer price index (CPI) increased 0.4% on the month, putting the 12-month inflation rate in line with forecasts at 2.9%. The core CPI annual rate, which discludes volatile food and fuel prices and is a key factor in policy decisions, notched down to 3.2% from the month before, slightly better than forecasted. Despite the nagging inflation and still-elevated borrowing rates, the job market remains resilient, with employers adding 256,000 jobs in December, nearly 100,000 more than economists expected. The unemployment rate in December ticked down to 4.1%, lower than the forecasted steady rate. The Federal Reserve started cutting rates in September 2024 and lowered its benchmark for a third straight month in December based on signs that the economy was slowing down. But the healthy December jobs report combined with lingering inflation supports the Fed’s intention to move forward with a slower pace of rate cuts this year—it is now penciling in only two quarter-point rate cuts in 2025, down from the four it forecasted in September. In November, the Fed released its Quarterly Report on Household Debt and Credit for Q3, which showed total household debt increased by $147 billion (0.8%) in Q3 2024, to $17.94 trillion. The report also showed that credit card balances increased by $24 billion to $1.17 trillion, with the average U.S. household owing $10,563 on credit cards going into the Q4 holiday shopping season. According to Experian’s Ascend Market Insights, at the end of November, 5% of consumers had total balances over their limits and 11% of consumers had a high utilization of 81-100%.  Experian’s Ascend Market Insights from November also showed overall delinquent balances (30+ DPD) decreased by 3.78% while up on unit basis by 1.61%. This net was driven by decreases in delinquent first mortgage and unsecured personal loan balances, which were offset by increases in delinquent bankcard balances and on a dollar basis in delinquent second mortgages.  Meanwhile, millions of Americans may see significant changes to their credit reports in the coming months if they have either unpaid medical bills or student loans, but the effects of each are opposite.  Since March 2020, delinquent student loan borrowers have been exempt from credit reporting consequences, but the required payments resumed in October 2024. As a result, an estimated 7 million borrowers who have fallen behind on their federal student loan payments or remain in default will start seeing negative credit reporting in the coming months if they don’t resume payments. Conversely, for the roughly 15 million Americans with unpaid medical bills, a new rule from the Consumer Financial Protection Bureau (CFPB) will ban and remove at least $49 billion in medical debt from consumer credit reports and prohibit lenders from using medical information in their lending decisions, providing a boost to credit scores and financial access. CFPB Looks at Medical Debt, Student Loans and So Much Data Medical debt wasn’t the only focus for the Consumer Financial Protection Bureau in Q4. In addition to specific actions targeting offenders in the consumer financial services industry, the CFPB announced myriad other topics of interest to close out 2024 with a sharp focus on protecting consumers and their data. At the end of October, the CFPB finalized a personal financial data rights rule that requires financial institutions, credit card issuers and other financial providers to unlock an individual’s personal financial data and transfer it to another provider at the consumer’s request for free, making it easier to switch to providers with superior rates and services. The rule will help lower prices on loans and improve customer service across payments, credit and banking markets by fueling competition and consumer choice.  In November, the CFPB issued a report detailing gaps in consumer protections in state data privacy laws, which pose risks for consumers as companies increasingly build business models to make money from personal financial data. The report found that existing federal privacy protections for financial information have limitations and may not protect consumers from companies’ new methods of collecting and monetizing data, and while 18 states have new state laws providing consumer privacy rights, all of them exempt financial institutions, financial data, or both if they are already subject to the federal Gramm-Leach-Bliley Act (GLBA) and the Fair Credit Reporting Act (FCRA). Then, the Bureau finalized a rule on federal oversight of digital payment apps to protect personal data, reduce fraud and stop illegal debanking. The new rule brings the same supervision to Big Tech and other widely used digital payment apps handling over 50 million transactions annually that large banks, credit unions and other financial institutions already face. As 28 million federal student loan borrowers returned to repayment, the CFPB issued a report uncovering illegal practices across student loan refinancing, servicing and debt collection, identifying instances of companies engaging in illegal practices that misled student borrowers about their protections or denied borrowers their rightful benefits. This followed the release of their annual report of the Student Loan Ombudsman, highlighting the severe difficulties reported by student borrowers due to persistent loan servicing failures and program disruptions. Uncertainty in Consumer Sentiment The Fed’s Survey of Consumer Expectations from December showed that inflation expectations were unchanged at 3.0% for this year, increased to 3.0% from 2.6% at the three-year horizon, and declined to 2.7% from 2.9% at the five-year horizon. Reported perceptions of credit access compared to a year ago declined as did expectations about credit access a year from now. Additionally, the average perceived probability of missing a minimum debt payment over the next three months increased to 14.2% from 13.2% and was broad-based across income and education groups.  The November PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report” found that from September to October 2024, the share of consumers living paycheck to paycheck overall rose slightly from 66% to 67%. Surveyed cardholders said their outstanding credit balance is either holding constant or increasing—25% said their outstanding balance increased over the last year, while 55% said it stayed about the same. Moreover, many consumers, and especially those having trouble paying their monthly bills, report maxing out their cards regularly and using installment plans to cover basic necessities.  According to NerdWallet’s 2024 American Household Credit Card Debt Study, more than 1 in 5 Americans who currently have revolving credit card debt (22%) say they generally only make the minimum payment on their credit cards each month. And with credit card rates averaging 20%, interest costs could almost triple the average debt for those making minimum payments after factoring in interest expenses. The University of Michigan’s index of consumer sentiment dropped to 73.2 at the start of January 2025 from 74.0 in December after views of the economy weakened on expectations of higher inflation in light of the new administration’s proposed tax cuts and new import tariffs. Unlike some of the polarization of recent months, which had seen more positive responses among Republicans than Democrats, January’s deterioration in economic expectations was seen across political affiliations. While consumers’ views of their personal finances improved about 5%, their economic outlook fell back 7% for the short run and 5% for the long run, with year-ahead inflation expectations jumping to 3.3%, up from 2.8% in December and the highest since May last year. What Does This Mean for Debt Collection? Over the next 12 months, debt collection companies expect an increase in account volume but a potential decrease in account liquidity, according to TransUnion’s latest Debt Collection Industry Report. If the goals are implementing strategic operational efficiencies and improving the consumer experience to facilitate debt repayment, the means to the ends include investing in technologies like artificial intelligence, solving for scalability, and optimizing communication channels and consumer self-service engagement. For lenders and collectors, here are some recommendations for your debt collection strategy in 2025: Scalability, Go Big or Go Home. Higher account volume calls for operations that can scale cost-effectively while offering the right consumer experience. Embracing smart technology is your best bet to keep up, and figuring out when to buy tech-enabled products and services versus when to invest in building it yourself will be key to making it work. Reduce Friction for Consumers. Self-service portals in collections reduce friction and foster a sense of autonomy for consumers to manage their debt without the pressure or inconvenience of interacting with a call center agent. Besides creating a more streamlined experience for the consumer, organizations will also benefit from associated cost-savings, compliance controls and scalability. Compliance Changes, Adapt or Perish. The debt collection industry experienced notable legal and compliance changes in 2024, including important litigation outcomes and updates to digital communications regulations, and keeping up with more changes to come will be critical to your business. Join our Legal and Compliance Roundup webinar on Jan. 29 to learn about the latest developments and how they will shape strategies and industry practices in 2025. Register here: https://bit.ly/4h4tacd SOURCES: PaymentsJournal - New Holiday Debt  USA Today - Leftover Holiday Debt BadCredit.org - Financial New Year’s Resolutions CNBC - Inflation CBS News - Jobs Federal Reserve Bank of New York - Household Debt and Credit Forbes - Medical and Student Debt Education Department - Student Loan Borrows in Default CFPB - Federal Oversight of Digital Payment Apps CFPB - State Data Privacy Gaps CFPB - Personal Financial Data Right Rule CFPB - Illegal Practices in Student Loans CFPB - Student Loan Ombudsman Annual Report Federal Reserve - Consumer Expectations PYMNTS Intelligence - Paycheck to Paycheck Wall Street Journal - Consumer Confidence (Univ. of Michigan) NerdWallet - 2024 American Household Credit Card Debt Study TransUnion - Debt Collection Industry Report 2024

Email has come a long way from the mass blast messaging—developing, customizing, and optimizing intelligent email strategies has shown success in both engagement and repayment rates in debt collection. But there's more that goes into harnessing this channel than just hitting send and hoping for the best. Here’s how creditors and collectors can strategically leverage email in debt collection communications to enhance engagement, maintain compliance, and drive repayments. Why is Email Critical in Collection Communications? In today’s increasingly digital world, most businesses are already using email for consumer communications, from marketing to policy updates, so extending that to engaging delinquent accounts is a natural next step. Email is a familiar tool for both senders and recipients, and businesses benefit from this in terms of engagement and repayments: 99% of email users check their email every day, some as much as 20 times a day (vs 94% ignoring unidentified calls) Contacting first through a consumer’s preferred channel can lead to a more than 10% increase in payments (and over half of consumers state email as their preferred channel) Digital-first consumers contacted digitally make 12% more payments than those contacted via traditional channels Beyond engagement effectiveness, email is a cost-effective communication tool, especially compared to traditional methods like physical letters or phone calls. Printing, postage, and call center costs quickly add up, whereas email offers a scalable option for communicating with delinquent accounts. Moreover, email provides a secure and traceable audit trail. Each email sent can be tracked, and responses are timestamped, offering businesses a transparent record of all communications for compliance and reporting purposes. Core Components for a Successful Email Program While adding email into the communication channel mix is critical, it is the set up, execution, and continued optimization of that email program that can actually make a difference when it comes to consumer engagement. There are many elements, but three core components of a successful email strategy are: Infrastructure: An email program is built on several components—Mail Servers, Mailbox Providers, Internet Service Providers (ISPs), Email service providers (ESPs), and more—and while infrastructure can be complex, the risks a business runs without a sound infrastructure are quite consequential, including having sent emails blocked, deferred or delayed delivery, or winding up lost in the recipient’s spam folder. Data: Understanding data collected from consumer interactions helps intelligently influence an email strategy in a debt collection program, especially when focusing on email engagement metrics (such as Opens, Clicks, Unsubscribes, and more)—but skipping over these analytics and just using mass blast techniques can result in consumer complaints, hard bounces, falling into spam traps, and ultimately lower repayment rates. Content: Solid infrastructure and reliable data are essential in any email program, but when it comes to debt collection, content can be the tipping point between a consumer committing to repayment or ignoring the outreach altogether (or even reporting your communications as spam or harassment)—from subject lines to your call-to-action (CTAs), sending the right message to consumers is crucial. If your email efforts are missing any of the core components, it doesn’t matter if your collection strategy qualifies as omnichannel—your operations are going to be missing recovery opportunities. But let’s take a look at the use cases and success stories that harness the power of email for better consumer experience and bottom line results. Use Cases and TrueAccord Success Stories Surveys show 59.5% of consumers prefer email as their first choice for communication, and even the courts have ruled that email is less intrusive than a phone call for debt collection. This case—Branham v. TrueAccord—is a win for consumers, creditors, collectors, and omnichannel as a communication method. The court victory by TrueAccord Corp. (TrueAccord) in the Northern District of Illinois showcased the benefits of digital collection as the court found receiving an email about a debt is less intrusive to consumers than receiving a phone call. Considering that, when given the opportunity, more than 29% of consumers resolve their accounts outside of typical business hours (before 8am and after 9pm) when it is presumed inconvenient to contact consumers under the federal Fair Debt Collection Practices Act (FDCPA), relying solely on reaching consumers during a call center’s business hours can result in almost a quarter of consumers not engaging or taking the next steps in their repayment process. Using a sophisticated omnichannel strategy helps TrueAccord reach consumers at times that are right for the consumer and through the right communication channel, which ultimately creates a non-intrusive consumer experience. Want to know more about how the omnichannel approach and how each channel influences the effectiveness of a business’s overall collection strategy? Download our new eBook, Omnichannel Communication in Debt Collection: An In-Depth Look at Advanced Engagement Strategy by Channel now»»

The terms "omnichannel" and "multi-channel" are frequently used to describe consumer outreach strategies, and while they may sound similar, the differences between these approaches are crucial, especially for effective debt collection. Let’s break down the key differences between omnichannel and multi-channel communications, particularly in the context of debt collection, and why these distinctions matter more than ever. Missed Opportunities of Multi-channel Communications Multi-channel communication refers to the use of multiple, separate communication channels to reach a consumer—such as email, text messages, phone calls, letters, or even self-service portals—but each channel operates independently from the others, and there is little to no integration between them. For example, a consumer may receive an email notification about their outstanding balance, followed by a text message a few days later. These two forms of communication are treated as isolated experiences, with no connection between them. The consumer’s journey is fragmented and valuable insights on the consumer’s behavior is lost for the business. While the multi-channel goal is to maximize interaction across the various channel touchpoints, it doesn’t enable cohesive consumer insights to influence engagement strategies, leaving better engagement and repayment opportunities on the table. The Power of Omnichannel Communications Omnichannel communication, on the other hand, goes a step further by integrating all available channels to create a unified engagement strategy. Whether the debtor is engaging with a text message, phone call, email, or self-service portal, the consumer’s journey flows smoothly across these channels. If a consumer receives an email notifying them of their debt and soliciting repayment but opts instead to speak with a representative over the phone, the omnichannel approach ensures that the agent is aware of the context of the earlier interactions. The overall experience aims to be personalized and unified for the consumer, while delivering the business a comprehensive view of the consumer’s behavior and need (which can help influence more streamlined outreach with similar consumers in the future). And omnichannel isn’t just about analytics and insights—studies have shown: Initiating contact with delinquent consumers through their preferred channels can lead to a more than 10% increase in payments The omnichannel approach has been shown to increase payment arrangements by as much as 40% Omnichannel is the Future of Debt Collection—And TrueAccord Leads the Way What sets omnichannel apart is the technology that underpins it—and TrueAccord stands apart with our patented machine learning engine, HeartBeat. By leveraging sophisticated data and insights from over 35 million consumer engagements accumulated over TrueAccord’s 12 years of service, our omnichannel approach tracks and adapts to evolving consumer behavior in real-time. If a consumer opens an email but doesn’t respond, our system might trigger a follow-up text or phone call at the right moment—tailored to the individual’s preferences and previous interactions. Our decision engine, HeartBeat, determines the right channel to send the right message at the right time for optimal engagement. We approach consumer communication from an overall reachability perspective to effectively engage more accounts and get more resolution versus simply determining if one channel is better than the other. While multi-channel strategies can help organizations reach consumers across various touchpoints, the omnichannel approach delivers a truly unified, personalized, and seamless experience that prioritizes the consumer’s journey. By integrating communication channels and using data to respond to consumer behavior in real-time, TrueAccord can not only increase the effectiveness of their outreach but ultimately lead to higher recovery rates. Want to know more about how the omnichannel approach and how each channel influences the effectiveness of a business’s overall collection strategy? Download our new eBook, Omnichannel Communication in Debt Collection: An In-Depth Look at Advanced Engagement Strategy by Channel now»» Sources: McKinsey FICO

In the financial technology sector, there are many services that individual companies, known as fintechs, can specialize in. For one such fintech, their focus was powering money for people and businesses through electronic funds transfer and international money transfers. As the company grew, so did the challenges associated with managing past due accounts—a crucial aspect of maintaining a healthy financial operation. By relying solely on its internal team to manage debt collections by manually sending emails and making outbound calls, the fintech faced significant challenges as it grew with scalability and performance, especially for later stage delinquencies. To effectively manage increasing volumes of accounts, the fintech recognized they would need to expand their efforts and broaden their reach—but traditional ways of adding more headcount proved to be an impractical solution given the associated costs and time required to onboard new employees. But a better solution was just a partnership away with TrueAccord. This partnership meant the fintech could skip the strain of adding more dedicated team members or building in-house programs and instead leverage TrueAccord’s advanced digital and self-serve collections platform. This solution not only improved liquidation performance but also significantly increased collection recoveries on a month-over-month basis. By optimizing the fintech’s late-stage debt collection operations, TrueAccord quickly delivered impressive results: the fintech was able to collect nearly $500,000 within the nine months of partnership in 2024. Get the full coverage of TrueAccord’s solution and the fintech’s impressive results by downloading the free in-depth case study here»» Ready to scale-up your debt collection strategy for better engagement and liquidation rates? Schedule a consultation with TrueAccord experts today!