Debt Collection is Dead, Long Live Debt Collection!

By on August 8th, 2015 in Compliance

A gloom hangs over the debt collection industry. Between the recent FCC ruling and the decline of postal mail, there’s talk on the internet about the death of the debt collection industry, or at least its most popular tools. Now with the upcoming FTC-sponsored Debt Dialogue, the industry is preparing to get before regulators to discuss how business is being stifled amongst mounting costs and regulations. Sometimes we feel like an outdated robocall (*zing*) when we say that there’s a better way.

It’s the 21st century, time to use the communication tools available to us. Let’s start by putting aside the clunky user experience of the 19th century postal mail system. Consumers have smartphones and use email, sms, social networks on a daily basis. As we mentioned before, users like choice in how and when they’re contacted and the financial lending industry wants to give it to them. Our discussions with leading lenders reveal a growing preference for digital communications for its superior user experience. They know that a bad user experience for their customer, may eventually affect their brand and leave them open to unwanted regulatory scrutiny. As an industry that works closely with creditors, it’s important for us to adjust to the needs of our clients and their customers, providing both with the superior user experience they come to expect from other players in the financial services sector.

Additional regulation of phone usage in debt collection is jarring because collection agencies have used it as their primary tool to recover debt for the last 60 years. Robocalls were a welcome invention, but they too only iterated on how the industry used phones; and now, the process is all, but outlawed. Though necessary in certain collection situations, the FCC’s requirement that conversations with customers require consent, means that there will be an increased need for manual dialing; which comes with accompanying personnel costs. This can be steep for smaller agencies who may need to decide between closing shop or moving to the less efficient/effective debt collection letter model.

The industry is changing, clients expect a better user experience from their vendors, customers expect a user experience that matches that of their creditor and increased compliance and regulation makes debt collection an exacting science. As an industry whose tools of yesteryear, the phone and postal mail, are going the way of the Dodo; we need to move to a model of digitization with an eye on compliance. In this shifting climate we have an opportunity to evolve using available and creating, new tools. We can forge ahead crafting improvements to user experience, efficiency and debt recovery; so that these tools become the industry standard. We believe this adaptation will reinvigorate debt collection and it won’t be long before we say: “Long live debt collection!”