The CFPB put the full video from their debt collection field hearing on their YouTube channel. Participants were allowed 2 minutes to respond, and our CEO took that opportunity (watch here).
Thank you for the time today. My name is Ohad, I’m CEO of TrueAccord, a company that uses data and machine learning to fundamentally change the consumer experience in debt collection. We’ve been studying the new proposal since yesterday. We believe it is a big step towards improving consumer protection. Weeding out bad actors is going to level the playing field and create a race to the top that will benefit everyone.
When finalizing the rule, we think the CFPB should continue to encourage innovation in this space by providing clear and unambiguous guidelines on how to use new technology in the collections process. As a data-driven startup company, we have empirical evidence showing hat using new technologies in the collection space – text, email, social media, digitizing the dispute process – significantly improves consumer protection.
One, it improves protection measured by consumer feedback and a marked reduction in consumer complaints. Consumers understand and react to our personalized, targeted communication.
Two, it significantly reduces communication frequency; reduces call frequency by up to 95%, well under the limitations proposed in this new proposal, using channels that consumers feel are much less intrusive.
Finally, it does all of the above while meeting or exceeding traditional performance in liquidation. Nobody is going to go out of business by using new technology (and we’ll add here: versus continuing to insist on hardly-compliant calling tactics).
Again, the CFPB should considering supporting innovation by providing clear guidance for the use of technology. It will improve consumer protection and will help he industry as a whole. We look forward to cooperating with the CFPB and policymakers on this shared goal.
The online lending space is experiencing tremendous interest, leading to explosive growth and an influx of capital. Many companies grow overnight, raise big rounds of venture capital; vying for a piece of an increasingly competitive market. While top-line growth and customer acquisitions are top of mind for new and existing players, the increase of competition puts a lot of pressure on margins. When focus moves to profitability and unit economics, reducing defaults has a significant impact. After optimizing underwriting criteria, many lenders turn to optimizing collection and recovery strategy.
Now, there is a limited set of tools available to collection strategists, especially considering it’s a service that’s been around for millennia. Traditionally, companies collect in-house, outsource to an agency, sue debtors, or sell their debt (or any combination of the above). Are these tools efficient? Which ones are best? And specifically – should new lenders sell their debt?
Continue reading “Top Three Reasons Lenders Shouldn’t Use Debt Sales (and Two Reasons They Should)”
We’ve discussed the advantages of machine learning based collections before, that’s because cost to collect drops significantly, the system’s flexibility allows more thorough and diligent handling of accounts, and—when done well—is better at liquidation than a call center. These systems have another advantage: they inherently provide better collection compliance than call centers. Why?
Continue reading “Three reasons your collection compliance officer will love machine learning based collections”
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).
Continue reading “Three Reasons Collection Calls May Be Vanishing”
What do collection vendor managers look for in a new collection service? A vendor manager often receives 3-5 pitches a week from new collection services. As it stands, onboarding a new service is difficult due to regulatory compliance while promises of better performance abound. Still, returns are often weak. Currently, technology is limited in the collections space, so the best thing a vendor manager can do is place accounts with a service for 4-6 months; inferring collection rates from monthly remittance reports.
This dynamic no longer makes sense. Technological progress means that debt collection can be a controlled and data-driven process. Being a modern collection service means using more sophisticated tools for better results. Now vendor managers can demand more of the next service that pitches them for their collections portfolio.
Continue reading “Every 21st Century Debt Collection Service Must Include These Three Features”
On September 9th the CFPB released consent orders for Encore Capital Group of San Diego, CA and Portfolio Recovery Associates (PRA) of Norfolk, VA following an investigation uncovering their attempts to collect debt that they knew or should have suspected were invalid. Hitting the US’s two largest debt buyers and collectors with a combined settlement of $72 million in refunds and penalties (as well as the inability to collect on an additional $128 million in debt) for using deceptive tactics, sends a clear message about best practices surrounding debt substantiation in the collections industry.
Continue reading “CFPB enforcement paints a new world in data requirements: don’t be caught unprepared”
TrueAccord has been refining the debt dispute process since our inception in 2013. We’ve found that offering digital disputes streamlines the conversation between consumers and collectors while also reducing compliance risk. By encouraging consumers to stay engaged during the collections process, we’re creating an opportunity to discuss debt-related concerns. As a result, complaints decrease, leading conversations to move quickly into debt resolution.
Read the following excerpt and download the entire whitepaper for free.
The dispute process is as opaque to the collector as it is to the consumer. While respecting the 30-day window and not pressuring consumers to pay while the debt is in dispute, a collector is never quite sure whether a dispute is en route via the postal system. This leaves a long period – days and often weeks –in which the consumer knows that a dispute is “in the mail”– but the collector is still lawfully able to contact them. This creates an ambiguous situation that often leads to consumer complaints.
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.
Continue reading “Debt Collection is Dead, Long Live Debt Collection!”
Earlier last week, I, along with TrueAccord’s CEO, Ohad Samet and general counsel, Avital Samet, attended the Association of Collections and Credit Professionals International (ACA) convention in Boston. Even though it was my third time attending the ACA convention; it was my first time attending as Head of Business Development for TrueAccord.
If you work in debt collection, attending the ACA conference is worth it. In addition to informative panels and the exhibit hall, there are a ton of networking opportunities. The collections industry is based on relationships and it is only through hallway conversations and drinks at end of day receptions that these relationships can be built.
Continue reading “Recap of ACA International Convention”
Choice is inherent in the way we, as 21st century consumers, interact with our world. The choice to eat whatever we want. The choice to take whatever form of transportation we like. The choice to marry whomever we wish. The concept of choice in debt collection isn’t revolutionary; debt collection has always been linked to the consumer experience. Yet, recent crack downs on bad actors in the debt collection space by the CFPB, as well as the July 10th ruling from the FCC feels like an affirmation of how TrueAccord approaches debt collection.
Continue reading “The FCC is Saying: Give Consumers Communication Choices”