The debt collection industry is under increased scrutiny; some say it’s under attack by consumer advocates and government regulators. Though this has been the situation for decades, detractors have had some notable successes in the past few years. Between the CFPB’s enforcement actions and the FCC’s recent ruling regarding consumer consent in phone communications, the key tenets of the industry are on shaky ground. With increased scrutiny on how consumers are contacted via phone, it’s hypothesized that collection calls will disappear from the collector’s toolbox (or be significantly reduced in volume, in favor of legal action).
Here are three reasons why collection calls may vanish:
- It’s easy to make mistakes in collection calls. Agents are traditionally compensated for dollars collected, an incentive structure that promotes violations at month’s end when an agent may be far off quota. As phone-based quality assurance in real-time is almost impossible, violations are hard to adequately predict and police. Couple that with increasing data and disclosure requirements and you’re faced with potential compliance risk with every phone call. Since the FDCPA is a strict liability law, every violation means possible exposure to regulatory scrutiny.
- Collection calls are becoming too expensive to support. Hiring and training costs are soaring, creating more strain on already slim margins. To break even, phone calls must be targeted and highly effective, but collectors are increasingly looking for low-cost alternatives to enable and scale collection operations. Now, adding express consent requirements and easy opt-out mechanisms for consumers turns calls into a losing proposition.
- Finally, web and digital tools provide rich, real-time and event-based data that optimizes collections. Calls, in comparison, are a problematic source of information. Voice and call analytics are still in their infancy and asking agents to recall the content of a call after it happens is a tedious task with unreliable results. As more sophisticated clients seek collection services, call-based analytics fall short of market expectations.
Is the collection call vanishing? It’s too early to tell, but a trend has begun, introduced by regulation and accelerated by the realities of the collections business. It casts a shadow on the phone call’s prospects for remaining the collector’s main tool. As we move deeper into the age of machine learning and artificial intelligence, human interaction gives way to machine-based decisions. This may mark the end of an era in debt collections.