Author: Noelle Robillard

What Makes an Effective Compliance Strategy for Collections?

By on September 16th, 2022 in Compliance, Industry Insights, Product and Technology
Blog Effective Strategy

Creating an effective compliance strategy is a crucial component of a business’s chance of success. Debt collection is highly regulated and must adhere to different regulations and laws like the FDCPA, Regulation F, and unique state laws—including regulations that may not be specifically focused on debt collection but still apply to the practice. Noncompliance with laws and regulations that govern or even parallel an industry can result in unhappy customers, litigation, reputational risks and/or enforcement actions.

Using a high-level overview of what an effective compliance strategy can look like, this article will help outline how to create a compliance management system to help your business mitigate risk and keep your customers happy.

What are the key elements to create a compliance strategy for collections?

Some of the key elements to an effective collections compliance strategy may seem like no-brainers but can be more complex than you realize. Being aware of what laws and regulations apply to your specific business, industry, state, and even local jurisdictions is a critical element. Equally, internal audits to make sure your business’ processes are working as intended is a great way to get a temperature check on your compliance’s health. Internal audits should be conducted on a routine basis.

Additionally, due diligence should be conducted on any third-party servicers you may work with for debt collection and recovery purposes: make sure they are legitimate, law-abiding, consumer-respecting businesses. For example, a great way to verify you’re working with a reputable debt collector is by searching the Receivables Management Association (RMAi) database. If a company is RMAi certified, that means they have passed and/or comply with the organization’s rigorous background checks, industry standards and best practices guidelines.

Beyond what can feel like the no-brainers of compliance strategy, another key element is having a Compliance Management System.

What is a Compliance Management System and what does it cover?

From a high-level view, a compliance management system (CMS) is how a company sets, monitors, and oversees its compliance responsibilities. The CFPB describes a CMS as how an institution:

  • Establishes its compliance responsibilities
  • Communicates those responsibilities to employees
  • Ensures that responsibilities for meeting legal requirements and internal policies and procedures are incorporated into business processes
  • Reviews operations to ensure responsibilities are carried out and legal requirements are met
  • Takes corrective action and updates tools, systems, and materials as necessary

What are the components of a Compliance Management System?

  • Board Management and Oversight
    • Allocate the right resources to compliance and risk management
    • Regular Board of Directors reporting
  • Policies and Procedures
    • Documented and updated at least annually by the business owner
    • Detect and minimize potential for consumer harm
    • Reviewed by Audit and Compliance to ensure followed and meeting requirements
  • Risk Assessment – Controls & Corrective Action
    • Documented and evaluated regularly by the business owner
    • Reviewed by Audit & Compliance to ensure mitigating risks and control gaps
    • Deficiencies remediated by business owner through corrective action plans
  • Training
    • Consistent with policies and procedures
    • Ready before a change or roll-out
  • Consumer Complaint Response
    • Recorded and categorized – used to improve processes
    • Investigated, prompt responses provided, corrective action
  • Monitoring & Audit
    • Aligned with risks
    • Independent – reporting shared with top management
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Why is a Compliance Management System important?

A compliance management system is important because it’s the checks and balances of the business you’re operating. One of the most important parts of a CMS are the policies and procedures—these help to manage risk by setting a framework and infrastructure to proactively and reactively respond to incidents, issues, and change, such as:

  • Changing product and service offerings
  • New legislation, regulation, interpretations, court decisions, etc. that address developments in the marketplace and are relevant to the product and service offerings of the organization
  • Unexpected incidents (data breach, global pandemic, etc.)

How can you ensure your compliance strategy is effective?

A compliance strategy is not “set it and forget it”—the strategy needs to be tied to the evolving consumer preferences and corresponding new compliance requirements to be effective. This helps businesses be proactive versus reactive. Ensuring checks and balances are in place helps establish proactive stance in case normal policy fails, gaps are discovered, or other unforeseen issues arise.

What can you do to ensure compliance strategy is effective for the future?

Want to learn more about the different facets of what makes a compliance strategy effective in collections? Join us Thursday September 29th at 1pm ET for our interactive webinar, The Future of Collections & Compliance, hosted by TrueAccord Associate General Counsel Lauren Valenzuela and Director User Experience Shannon Brown.

Reserve your space now for an interactive discussion on:

  • Cutting edge digital collection compliance
  • The role of the legal team in creating a digital collection strategy
  • How compliance drives collection revenue
  • The future of digital compliance

Register now for the upcoming webinar»»

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*Leana serves as TrueAccord’s Paralegal Operations Analyst II. This blog is not legal advice. Legal advice must be tailored to the particular facts and circumstances of each unique matter.

District Court Rules In Favor of TrueAccord

By on September 12th, 2022 in Compliance, Company News, Industry Insights
Blog Compliance Tamika Gilbert

A reply email with notice of attorney representation applies only to the individual account

A new District Court opinion weighs in on digital debt collection efforts, making clear that a notice of attorney representation provided in reply to an email about an account only applies to that specific account. In Tamika Gilbert v. TrueAccord Corp., Case No.: 1:21-cv-00486, the United States District Court for the Eastern District of Illinois, dismissed the case in favor of TrueAccord. This is another in a small line of cases relating to digital collection of debt. See, for example, the case of Greene v. TrueAccord, in which the court upheld TrueAccord’s use of email for the initial notification, also codified in Regulation F.

The Case

Ms. Gilbert sued TrueAccord alleging (1) TrueAccord made a false or misleading statement when it failed to inform her that an account was past the statute of limitations and (2) TrueAccord had contacted her after being informed that she was represented by counsel. After conducting discovery, both Gilbert and TrueAccord filed motions seeking summary judgment – a decision by the court without the need for trial that will be granted only if there are undisputed facts that permit a judgment under the law.

The parties agreed that:

  • TrueAccord emailed Gilbert on January 10, 2021 regarding Creditor A’s account;
  • TrueAccord emailed Gilbert by email on January 19, 2021 regarding Creditor B’s Account;
  • Gilbert’s attorney forwarded to TrueAccord a copy of the collection email regarding Creditor B’s account, stating, “I am representing this consumer. Do not contact her again.”
  • TrueAccord emailed Gilbert on January 24, 2021 regarding Creditor A’s account.

The Ruling

The court ruled in TrueAccord’s favor on two grounds.

First, the court found that Gilbert did experience harm when she said that the emails caused her to “shake with rage.” The Court ruled that these allegations of physical manifestations of harm were sufficient harm to confer standing to bring the lawsuit. While annoyance, stress, or anger are not sufficient harms without more, an alleged physical reaction to the emotion is sufficient harm for Gilbert to have standing to pursue the second claim.

On the merits of the communication-after-notice of attorney representation claim, the Court ruled in favor of TrueAccord and dismissed the claim. The Court found that Section 1692c(a) of the Fair Debt Collection Practices Act prohibits a collector from communicating with a consumer whom it knows to be represented by counsel with respect to such debt. The Court noted that the communication by Gilbert’s attorney was regarding the specific Creditor B account. Absent an express intent to represent a consumer regarding all accounts or a list of specific accounts, TrueAccord’s knowledge was limited to her representation with regard to the Creditor B account only. As the subsequent communication was regarding another account owed to a different creditor where TrueAccord had no knowledge of attorney representation, no violation occurred. TrueAccord did not send any further communications with respect to Creditor B’s account on which TrueAccord knew Gilbert to have counsel.

Second, with respect to the claim that Gilbert was confused by the notice stating that the account had passed the statute of limitations for the purpose of filing a lawsuit (a requirement of law), the court found that Gilbert had not alleged sufficient harm to have standing to bring the first claim. The court noted that Gilbert’s damages were the time lost allegedly contacting an attorney regarding the Out Of Statute (OOS) language. While lost time can be an injury that supports a claim, here the time allegedly lost was time was solely time spent consulting an attorney as doing so would permit anyone to create standing by retaining counsel.

Key Takeaways

This case is important because it reaffirms that attorney representation must be clear to be account specific, not consumer specific. It also adds another in a line of cases finding that a plaintiff must have sufficient harm to have the standing to bring a claim in federal court.

These key takeaways from the ruling help further clarify the parameters of digital debt collection communication for both creditors, collectors, and consumers. This wasn’t just a win for TrueAccord, but for the industry as well.

Want to learn more about the different facets of compliance in collections? Join us Thursday September 29th at 1pm ET for our interactive webinar, The Future of Collections & Compliance, hosted by TrueAccord Associate General Counsel Lauren Valenzuela and Director User Experience Shannon Brown.

Reserve your space now for an interactive discussion on:

  • Cutting edge digital collection compliance
  • The role of the legal team in creating a digital collection strategy
  • How cutting edge compliance drives collection revenue
  • The future of digital compliance

Register now for the upcoming webinar»»

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*Steve Zahn serves as TrueAccord’s Associate General Counsel. This blog is not legal advice. Legal advice must be tailored to the particular facts and circumstances of each unique matter.

Compliance & Collections: 22 Essential Terms to Know

By on September 8th, 2022 in Industry Insights, Compliance
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The world of regulatory compliance can be a complicated place, especially when it comes to debt collection. It can be tricky for non-security and compliance professionals. To help quickly get you up to speed on what auditors are referring to, we’ve put together a glossary, covering some of the most important compliance terms and acronyms.

  • Action Plan: A plan to identify and facilitate remediation steps of current operating practices. 
  • Audit: An unbiased and comprehensive examination of an organization’s compliance and adherence to regulatory guidelines. 
  • Benchmarking: The process of analyzing an organization’s performance data and comparing it against the industry standard. Used to see the effectiveness of a compliance program and if there are any areas that need improvement. 
  • Best Practices: When law and/or regulation is unclear, a “best practice” policy may be implemented to safeguard a business’s compliance.
  • Bona Fide Error Defense: An unintentional mistake or violation that occurred despite the maintenance of procedures reasonably adapted to avoid the mistake/violation. A debt collector may be able to assert a “Bona Fide Error Defense” in a lawsuit alleging violations of the federal Fair Debt Collection Practices Act (FDCPA). 
  • CCPA: The California Consumer Privacy Act (CCPA) gives consumers in California rights over the personal information that businesses collect and process about them.
  • CFPB: The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector.
  • Code of Ethics: A document or guide that is composed of an organization’s values, standards commitments, and a set of principles. 
  • Compliance: The state of adhering to established guidelines or specifications such as a policy, standard, specification, or law.
  • Compliance Management System: A series of integrated policies, processes, tools, internal controls, and functions designed to help an organization manage, monitor, and test  compliance with applicable laws and regulations (e.g., federal, state, local/municipal). A fully functioning compliance management system is designed to continuously minimize risk, prevent consumer harm and limit financial or reputational harm to the organization. An essential in the modern business world.
  • Compliance Risk: Captures the legal, financial, and reputational dangers for failing to act in compliance with laws and regulations.
  • Conflict of Interest: A conflict that happens in a decision-making situation in which an individual or organization is unable to remain impartial and where serving an interest would harm another.
  • Controls: A checks put in place to ensure compliance with a policy and procedure. A control could be automated or manual.  
  • Dodd-Frank Act: Dodd-Frank Wall Street Reform and Consumer Protection Act is a US federal law that governs the financial industry by enforcing transparency and accountability with rules for consumer protection, such as its Unfair Deceptive Acts and Practices provision. 
  • FDCPA: The Fair Debt Collection Practices Act (FDCPA) is a consumer protection law passed by Congress in 1977 to eliminate abusive debt collection practices and insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.
  • Fraud: The act of intentionally lying and cheating in order to obtain an unauthorized benefit. 
  • Governance: A formal framework made up of policy rules, processes, procedures and controls used to control risk and ensure accountability and transparency. 
  • Gray Area: A situation where the rules are not clear and can be open to interpretation.
  • Regulation F: A rule implemented by the Consumer Financial Protection Bureau (CFPB)  providing rules governing activities covered by the Fair Debt Collection Practices Act (FDCPA). It seeks to clarify and expand on the FDCPA, including requiring  collection agencies to provide additional information to consumers as part of the validation disclosure and clarifies rules for the use of digital communications. 
  • Remediation: The process of recognizing a compliance issue or deficiency and implementing an action plan to correct the deficiency or enhance/strengthen an area of compliance.  For remediation to be successful, the new or revised policies, processes or controls must address the deficiency or issue and to minimize risk. 
  • Risk Assessment: The process of identifying and analyzing all potential risks that an organization can face in relation to its legal and regulatory obligations. The results of risk assessments are prioritized based on severity and then used to determine areas of focus for risk mitigation.
  • Safe Harbor: A provision in a statute or regulation that protects against legal or regulatory liability in situations where the safe harbor provision conditions are met.
  • Transparency: The act of being open and honest while disclosing as much information about policies, procedures, and activities as possible.

Now armed with your glossary of terms, get ready to investigate the world of compliance in collections further in our upcoming webinar. Join us Thursday, September 29th at 1pm ET for our interactive webinar, The Future of Collections & Compliance, hosted by TrueAccord Associate General Counsel Lauren Valenzuela and Director User Experience Shannon Brown.  

Reserve your space now for an interactive discussion on:

  • Cutting edge digital collection compliance
  • The role of the legal team in creating a digital collection strategy
  • How cutting edge compliance drives collection revenue
  • The future of digital compliance

Register now for the upcoming webinar»»

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How Buy Now, Pay Later is Transforming Online Shopping With Gen Z

By on August 24th, 2022 in Industry Insights, Product and Technology
How Buy Now Pay Later is Transforming Online Shopping With Gen Z

Buy Now, Pay Later (BNPL) plans have taken over as a popular financing option for consumers, partly due to an increase in online shopping demands during the pandemic. In 2021, Americans spent more than $20 billion through BNPL services, taking up a bigger part of the $870 billion-a-year online shopping market. From laptops and airline flights to clothing and furniture, BNPLs make it simple to pay for almost anything in small installments. Since the start of the pandemic, millions of international consumers, especially Gen Z (10-25 years old), have gravitated toward using this service. According to a study by Forbes, BNPL use among Gen Z has grown 600% since 2019. The rise of interest in BNPL is also likely influenced by increased financial uncertainty, high-interest rates and a downward trend in credit card approval. As consumers show preference for digital financial services, BNPL continues to grow and become available at more retailers. 

Why are BNPLs Popular with Gen Z?

Services like Afterpay, Klarna, Affirm and others have gained a lot of popularity in recent years, especially among younger generations who may struggle with cash flow. With BNPL, the first payment is due at the time of purchase, with subsequent interest-free payments usually due within a few weeks or months. 

More and more, BNPL providers are reaching these younger audiences through influencers and brands on TikTok, and the variety of goods and services you can purchase with the service continues to expand. Some popular buy now, pay later items include clothing, concert tickets, cosmetics, electronics, furniture, groceries, hotels and flights.

But, like credit cards, missing payments can result in late fees and other penalties. With Gen Z, there’s already a pattern of missing payments. A survey conducted by Piplsay showed that 43% of Gen Zers missed at least one BNPL payment in 2021. 

Gen Z Favors BNPL More Than Other Generations

Debt types and payment preferences constantly change along with technology. The traditional credit card debt is being replaced by BNPL, specifically when we look at Gen Z. For one, it’s easier to be approved for a BNPL application since the process only requires a soft credit check, unlike a hard credit check that most credit card issuers require. When looking for an alternative to high-interest credit cards, BNPL installment payment plans are a popular option. BNPL consumers know upfront what will be expected of them, and the possibility for large debt build-up is replaced with a finite number of payment installments. This transparency and manageability make it easier to understand. And it’s one that has the potential to continue to evolve for the better by providing consumers with more inclusive credit and payments options.

When it comes to both luxury and essential purchases, younger consumers are more likely to take advantage of BNPL to afford them. A survey from TrustPilot found that 45% of consumers between the ages of 18 and 34 were likely to use such services for basic essentials while 54% would use them for luxury items. For those aged between 34 and 54, these results were 33% and 38% respectively. And for people aged 55 and up, the results were 16% and 24%. 

Since it’s quite easy to sign up for one or more BNPL loans, the likelihood of losing track of payments or overspending is real, especially for Gen Z. According to a report from J.D. Power, about one-third of younger consumers said they spent more than their budget allows with BNPL. And since different retailers offer financing through various BNPL services, it can also be a challenge to track multiple accounts at once. This isn’t surprising as some of the younger generations do not have the financial literacy or experience that older generations have and they’re more likely to face consequences and penalties like missing a payment.

Meet Gen Z Where They Are to Effectively Recover More

The good news is that the outlook for Gen Z BNPL customers that end up with accounts in collection is different than for those who default on credit card debt. On average, BNPL debts see higher and faster repayment rates than similar-sized credit card debts. Higher engagement leads to better repayment rates. According to TrueAccord data, the percent of BNPL customers who make a payment is more than double the like-size credit card accounts at 30 days post placement and 50% higher at 90 days. 

As a debt collection platform that engages digital-native consumers where they are and with a priority on customer experience, many leading BNPL providers partner with TrueAccord to address both early delinquencies and charged-off accounts. After these BNPL customers repay their loans and have a positive experience, they’re able and likely to use the service again, and this time with some experience about how it works. By using this information, TrueAccord can help find the most optimal ways to reach the younger audience and help them pay off their debt from BNPL. 

Want to learn more about how to engage with consumers of any generation in whatever stage of collection they might be in? Schedule a consultation to see what TrueAccord’s digital solutions can do for your debt recovery strategy. 

Further Reading: 

National Financial Awareness Day: Why Financial Literacy is Beneficial For Everyone

By on August 11th, 2022 in Industry Insights
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August 14 is National Financial Awareness Day, making it an appropriate time to shine a spotlight on initiatives that can help improve consumer financial awareness in the collections space. Financial literacy is an essential life skill that benefits people throughout their lives, but is often overlooked when it comes to what happens if a payment is late or missed. Financial literacy during delinquency is just as important as planning for the future—and can even play a big part in financial future-planning.

Whether it’s taking out a loan, buying a house, saving for retirement or purchasing goods on a credit card,, people are constantly being asked to make decisions that affect their personal finances. As reported by the Milken Institute, only about 57% of the American population is considered financially literate. In order to address this gap, lenders are in a unique position to help provide customers with educational content that not only improves customers’ financial literacy but helps with their own retention and acquisition strategies by building and maintaining customer trust and loyalty. Providing consistent outreach—especially in early delinquency—will give customers more opportunities to engage, understand, and resolve debt.

Debt levels are on the rise again: according to the New York Federal Reserve, between the national student loan debt topping $1.6 trillion in 2022 and household credit card debt also climbing, we’re seeing the largest quarterly increase in 22 years at $860 billion. And individuals become more susceptible to going further into debt if they don’t have a solid foundational understanding of what happens when they first fall behind. Overall, lower levels of financial literacy end up contributing to increased rates of bankruptcy, defaults, and foreclosures.

As financial services leaders know, maintaining customer relationships—including accounts in early delinquency—is more profitable than writing off bad debt due to ongoing loan and credit losses, and then having to start the acquisition process for a new customer all over again. The Receivables Management Association International (RMAI), a non-profit trade association for businesses in the financial services industry, understands this gap and the need for increased literacy created a website with many useful literacy resources for consumers offering free education on topics like managing personal finance, money, and investing. By sharing tools like this or taking on an array of education initiatives and implementing financial literacy as a component of your debt recovery strategy, businesses can help their customers regain their financial health.

TrueAccord is a certified business through RMAI’s Certification Program requiring an independent audit to confirm compliance with a set of rigorous uniform industry standards of best practice which focus on the protection of the consumer. Interested in learning how TrueAccord can help create a customizable user-beneficial experience for your customers? Schedule a consultation to see what TrueAccord’s digital solutions can do for your debt recovery and education strategy»»

What are We Seeing in Consumer Credit Trends Today? A Video Interview with Ohad Samet

By on August 9th, 2022 in Industry Interviews, Industry Insights, Webinars
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The financial landscape for both consumers and businesses is particularly uncertain right now. Many new fintechs and neobanks are experiencing their first delinquency surge and others soon to follow. This year, the challenges of managing delinquencies and navigating an uncertain economy will compound, making it imperative for companies to critically think about their strategy to collect from consumers in debt.

But from the perspective of a seasoned veteran of the financial services industry, what are we really seeing in consumer credit trends today? And what should businesses really be preparing for tomorrow?

We sat down with TrueAccord co-founder Ohad Samet to get his insights on what we’re seeing in consumer credit trends today, managing delinquencies, and how to navigate in this economy. Watch our interview or read the transcript below»»

What are we seeing in consumer credit trends today?

OHAD SAMET, TrueAccord co-founder:
I think we all notice that we’re dealing with a lot of lagging indicators in terms of consumer capacity to pay. Of course, one leading indicator is demand for credit. But in terms of what consumers are able to do—meaning their sentiment—are they willing to pay? Are they able to pay? Do they have enough disposable income? So many of these numbers are trailing indicators.

However, consumer net worth is still high. Why is that? It’s because stocks in primary, the value of primary residences, is calculated in the net worth of consumers. And so if you believe there was a bubble or just a run up in prices because of a lot of demand and very low supply, then that would artificially inflate the net value or net assets of consumers, and we will only discover how consumers are faring realistically in a few months.

Even if from a trailing indicator perspective, meaning delinquencies, net worth and so on, we are not seeing a drop yet. We’re only seeing banks increase their loss reserves in anticipation for losses.

We are definitely seeing a change in consumer sentiment. It can be because they’re running out of money. It can be because of general sentiment in the market. Inflation is up, risk is up, consumers start saving more—but we are definitely seeing that. And that, to me, is a leading indicator that we all need to be aware of.

Interested in learning how you can get ahead and prepare for delinquencies before they happen? Schedule a consultation to learn how TrueAccord can help you get started on your collection strategy»

TrueAccord Digitally Serves 20 Million Consumers on Path to Financial Health

By on July 12th, 2022 in Company News, Customer Experience, Machine Learning, Product and Technology
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With more than 20 million consumer accounts serviced through intelligent, digital-first collections products, results show better repayment and happier customers than “call to collect” agencies

LENEXA, Kan., July 12, 2022 — TrueAccord Corp, a debt collection company using machine learning-powered digital recovery solutions, today announced that it has served more than 20 million customers in debt with a digital-first experience. TrueAccord’s customer-centric approach and commitment to creating a positive consumer experience is reflected in its 4.7 Google customer satisfaction rating, customer feedback, and an A+ rating with the Better Business Bureau.

TrueAccord’s collection solutions harness machine learning and digital-first communications to deliver a personalized, consumer-friendly experience for those in debt. As is the nature of machine learning, the system dynamically analyzes and refines the approach used for each customer based on their interactions combined with years of previous engagement data in order to deliver the most effective communication treatment. The patented system, HeartBeat, which is now 20 million customer engagement interactions strong since its 2013 inception, continues to optimize with each new customer interaction.

“Machine learning is only as good as its data sources, and with more than 20 million accounts’ worth of engagement data that informs the HeartBeat system, we’re confident that the experiences being delivered are as streamlined and as aligned to consumer preferences as possible,” said Mark Ravanesi, CEO of TrueAccord Corp. “As a mission-driven company, we prioritize creating better experiences for consumers in debt, and based on our high customer satisfaction and repayment rates, it looks like we’re making significant progress.”

Powered by TrueAccord’s industry-leading tech stack, the product suite includes Retain, a client-branded early-stage consumer engagement platform for managing pre-charge off debt, and Recover, a full-service debt collection solution. Key benefits of both products include a simple, intuitive and effortless-to-use digital platform leading to great user experience, constant A/B testing and optimization to reduce friction and boost conversion rate, infinite scalability, and second-to-none channel deliverability. 

While holding customer experience as a priority, TrueAccord products continue to prove more effective than competitors, as evidenced by client case studies showing 25-35% better performance on accounts using Recover when compared to those placed with traditional agencies, and recovering $17 million in delinquent bills with a 44% paid in full rate using Retain.

To learn more about TrueAccord and its digital-first recovery solutions, visit www.TrueAccord.com and follow on Twitter and LinkedIn.

About TrueAccord

TrueAccord is the intelligent, digital-first collection and recovery company that leaders across industries trust to drive breakthrough results while delivering a superior consumer experience. TrueAccord pioneered the industry’s only adaptive intelligence: a patented machine learning engine, powered by engagement data from over 20 million consumer journeys, that dynamically personalizes every facet of the consumer experience – from channel to message to plan type and more – in real-time. Combined with code-based compliance and a self-serve digital experience, TrueAccord delivers liquidation and recovery rates 50-80% higher than industry benchmarks. The TrueAccord product suite includes Retain, an early-stage recovery solution, and Recover, a full-service debt collection platform.

Elevate Your Collection Strategy with Machine Learning and HeartBeat

By on July 7th, 2022 in Industry Insights, Machine Learning, Product and Technology
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Debt recovery and collection look quite different in 2022 than it did ten, five, even just a year ago: new channels to reach consumers, larger data sets to analyze, complex regulations that can vary state by state, and so much more.

So when it comes to deciding the best way to engage consumers and effectively recover debt, has your strategy evolved to keep up? Machine learning, artificial intelligence, data science—these terms are thrown around a lot, and for good reason.

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But how does it tactically improve the experience for both lenders and members?

Decoding Machine Learning for Debt Collection and Recovery

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To help decipher real differences between a machine learning strategy versus the traditional call-and-collect, we have designed a highly visual guide to cut through the jargon and help you understand the basics of machine learning in collections. Decoding Machine Learning for Debt Recovery and Collection provides straightforward definitions, clear diagrams, and bottom line benefits make this eBook your at-a-glance guide to machine learning in debt collection.

Download your complimentary copy of the new eBook Decoding Machine Learning for Debt Recovery and Collection here»

From delivering a better experience in-line with what consumers expect from businesses to streamline communications, machine learning has gone from a “nice to have” to a “must have” for collection efforts.

Upgrade Debt Recovery & Collection With HeartBeat

Although this type of technology is a step in the right direction, it’s only one step forward—your debt collection strategy can go even further with TrueAccord’s patented decision engine, HeartBeat.

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Integrating machine learning into your practice is certainly important—but how does this technology know what the best choice is to engage all of your delinquent accounts now and in the future?

Say hello to HeartBeat, our intelligent decision engine, and say goodbye to missed debt recovery opportunities left on the table by basic machine learning models. See exactly how HeartBeat upgrades your collection strategy in our new eBook, Upgrade Debt Recovery & Collection With HeartBeat—the more in-depth companion piece to our visual guide to machine learning (detailed above).

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While HeartBeat utilizes machine learning in its decision-making process, it is not limited to it. This decision engine is continuously evaluated for performance, and adjusted to align with the current economic situation, changes in consumer behavior, and updates to compliance rules.

If you are switching from a more traditional outbound approach then a basic machine learning model can provide a short-term lift in recovery rates, but will hit a dead end when it comes to optimizing, adapting, and improving over time. HeartBeat is set up for the long game and recovers more because of it.

Download your complimentary copy of the new eBook Upgrade Debt Recovery & Collection With HeartBeat to learn how to start recovering more»

Elevate Engagement, Recover More

Together, these two companion eBooks, Decoding Machine Learning for Debt Recovery & Collection and Upgrade Debt Recovery & Collection With HeartBeat, serve to be the ideal introduction into machine learning in debt collection and then a deeper look beyond the basics to see what even more advanced technology can do for your recovery operation.

Discover how an intelligent, digital-first collection strategy drives overall improved performance, better member experience, and the more effective recovery of delinquent funds—without implementing more manual processes or adding headcount to your team.

Schedule a consultation today with one of our experts today to learn more about how you can elevate your debt collection practice today.

Bridging the Gap Between Machine Learning and Human Behavior with HeartBeat

By on June 27th, 2022 in Machine Learning, Industry Insights, Product and Technology
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When it comes to engaging consumers in debt collection, behavioral science helps us to understand and respond to an individual’s situation, motivations, and contact preferences.

For example, we know that consumers don’t like being called by debt collectors. With that knowledge, behavioral science then helps us determine the optimal way to meet consumers where they are, contact them when they want by using their preferred channels, and lastly sending a message that resonates with them enough to engage.

It starts with a lot of engagement data. At TrueAccord, we’ve been collecting data about how consumers engage with us for nearly 10 years to determine the optimal ways to engage with consumers, and then use that data to generate a special collections experience just for them – from best time, best channel, and best language to engage that individual consumer.

Take content for example, each person is unique and different people respond differently to different communications. They are driven to action by different words and are convinced for different reasons. In writing content, it’s our goal to write content that responds to these individual needs.

There are 2 things we consider when writing content for collection communications: content type and content dimensions.

  • Content type is what we send based on a user’s actions. As an example, following up on a page view—if a consumer is viewing a payment plan, disputing a debt, or thinking about unsubscribing but drops off the page, we will try sending a follow up email or SMS with other plan options, information about the account, a description of how to unsubscribe or dispute for them to view. We will continue to try different content types until we find the right one that engages the consumer.
  • Content dimensions are more established behavioral science frameworks used to ensure that our communications vary in style and tone so that we are speaking to consumers in a unique way that will motivate them to engage. Everyone responds to different motivations so we use a variety of different frameworks until we find the one that connects with the individual

Each piece of content is tagged depending on the content type and dimensions so it can be easily used by HeartBeat, our powerful and intelligent patented-machine learning engine. Good content will lend itself well to automated, data-driven prioritization done by HeartBeat to present customers with the best possible content item at each given time.

How can technology personalize the debt collection experience?

By using technology and behavioral science to determine the best way to communicate with consumers, we are able to personalize each user’s unique experience. Our patented machine learning engine mentioned above, HeartBeat, allows us to do just that. HeartBeat collects engagement data and then, after analyzing multiple solutions, suggests the best possible treatment depending on the individual and their engagement. HeartBeat also uses a real-time feedback loop so the technology can adapt to a consumer’s engagement right as it happens.

Instead of relying on data like age and location, HeartBeat uses engagement data to personalize the communication process. The engagement data is collected every time a consumer engages in a certain way, whether it’s clicking on an email or SMS, visiting a webpage, and/or viewing payment plan options. Our system learns what motivates the consumer and responds with content or payment options that will resonate with them.

For example, if the consumer clicks on an email that uses likable content mentioning “short term cash flow,” our system may determine to send a friendly follow up email letting them know that they can set up a payment plan that starts on a later date when they’ll have the ability to make a payment. We know what motivates an individual may change from day to day depending on their circumstances, so we treat them based on their active engagement and behavior with our system rather than construct a specific profile for each consumer and treat them based on that basic account profile.

By combining behavioral science and machine learning, the best-possible payment options are offered to customers based on their debt situation, previous communication, and engagement data. Whether their actions show that they would benefit from a long-term payment plan, or if it shows that they’d prefer to pay in full, HeartBeat will suggest the best option for that customer. The power of using behavioral science and machine learning is anticipating the needs and preferences of our customers and using that to help them as seamlessly as possible.

Overall, there is no one way of communicating that will work for everyone across all situations, and tailoring communication and collection strategy to align with consumer preferences is better for both the consumer, lenders, and our business. That’s why building the bridge between machine learning and human behavior is essential.

Discover how HeartBeat can help humanize your collection process in our new in-depth eBook, Upgrade Debt Recovery & Collection With HeartBeat, available for download here»

Learn more about behavioral science from TrueAccord’s User Experience Director, Shannon Brown in a new interview in Collector Magazine here»

CFPB Issues $4M in Penalties and Permanent Bans Against Predatory Collection Ring

By on May 26th, 2022 in Industry Insights
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On May 23, 2022, the Consumer Financial Protection Bureau (CFPB), in partnership with the New York Attorney General, filed a proposed judgment against a debt collection enterprise with a history of deception and harassment to pay $4 million and be permanently banned from the debt collection industry.

This follows the September 2020 Federal Trade Commission (FTC) initiative “Operation Corrupt Collector” to protect consumers. The FTC, along with more than 50 federal and state law enforcement partners, focused on several predatory collection methods, including “phantom debt collection,” a practice where companies were trying to collect debts they cannot legally collect or that a consumer does not owe.

According to federal regulators in the 2022 case, the group of debt collectors in upstate New York went after their targets by calling friends, family and employers and orchestrating “smear campaigns” against people they claimed owed money—only one part of the predatory practices the debt collection ring employed.

Predatory Practices in Debt Collection

The collection industry has long been scrutinized for the methods used to engage and recover debts, but technology and social media have created new avenues for predatory practices to evolve. In addition to the smear campaigns, other illegal tactics to collect debt outlined in the CFPB lawsuit include:

  • Falsely claiming arrest and imprisonment
  • Lying about legal action
  • Inflating and misrepresenting debt amounts owed
  • Harassing people with repeated phone calls
  • Failing to provide legally mandated disclosures

Contacting to Collect Via Social Media

As of November 30, 2021, debt collectors can now contact consumers on social media. This change to the Fair Debt Collection Practices Act (FDCPA) did include specific rules for social media communications:

  • The message must be private
  • The debt collector must identify themself
  • The debt collector must provide a way for the consumer to opt-out of social media communications

In addition to these new rules under the FDCPA, collectors who abuse or harass consumers via social media violate the Dodd Frank Act’s prohibition against unfair deceptive abusive acts or practices (UDAAPs). The CFPB and FTC through Operation Collection Protection, also look to prosecute UDAAPs in their protection of consumers

Compassion Collects More (and Protects Against Penalties)

Although the majority of collectors do not go as far as committing “emotional terrorism,” as one social media smear campaign victim described in the 2022 lawsuit, finding the appropriate way to connect with today’s consumers to recover delinquent funds can seem nebulous—and nerve-racking with the potential for hefty penalties.

Even as communication channels expand and new regulations are handed down, best practices to engage with consumers remain the same: friendly, humane messages will empower and motivate customers to pay more effectively than aggressive outreach and threats. TrueAccord has proven that this compassionate approach works with more than 16 million customers served, 4.7 on Google reviews, A+ rating with the BBB, overwhelmingly positive customer feedback, and industry-leading recovery results.

Discover how you can flip the script on your collection communication with TrueAccord and protect your business and customers. Schedule a consultation today to get started»