Using SMS in Omnichannel Debt Collection—Digital Strategy Beyond Email

By on January 27th, 2025 in Customer Experience, Product and Technology, User Experience

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»»