Efficiency, accuracy, and compliance are critical in the fast-paced world of debt collection. TrueAccord, a leader in digital-first debt collection, is leveraging Robotic Process Automation (RPA) bots to transform the industry and improve operational efficiency, compliance efforts, and customer experience.
At TrueAccord, we’re not just collecting debt; we’re revolutionizing the process with this kind of cutting-edge technology. These aren’t your average macros; they’re sophisticated software tools that automate repetitive tasks, freeing up our team to focus on more complex and strategic work. In this blog post, we’ll explore how TrueAccord is utilizing RPA technology, our unique approach to automation, and the benefits that this technology offers to our company and our clients.
What is an RPA Bot?
RPA bots are software tools designed to automate repetitive, rule-based tasks traditionally performed by humans. These bots interact with digital systems in the same way a human would—by clicking buttons, entering data, or reading information from documents. They can handle tasks like customer service inquiries, data entry, invoice processing, and report generation, improving efficiency and accuracy while reducing human error. RPA bots can even be strategically utilized to enhance first line controls and compliance monitoring, which are vital processes for debt collectors. RPA bots can be programmed to work across various applications and systems without needing complex integrations, making them a versatile solution for automating business operations.
RPA is particularly valuable for organizations looking to improve productivity and reduce costs. By automating repetitive and time-consuming tasks, employees can focus on higher-value activities that require a nuanced approach or complex problem-solving. RPA bots can be set up quickly and are scalable, making them ideal for businesses of all sizes. As they operate 24/7 without the need for breaks or downtime, they can significantly enhance operational efficiency while ensuring consistency and speed in completing tasks.
For example, when issues arise, there might be a need to update thousands of accounts. Previously, a human would have to manually go into each account, add a comment, and make necessary updates. With RPA, bots take care of this task in a fraction of the time, updating entire lists of accounts in minutes instead of hours or even days.
How does TrueAccord Use RPA Bots?
At TrueAccord, RPA is a key part of how we ensure compliance, respect consumer preferences, and drive better outcomes across the debt collection lifecycle. By automating previously manual tasks, RPA bots help us maintain accuracy, consistency, and adherence to regulatory requirements. Many of our bots operate through API (Application Programming Interface) calls, which connect directly to backend systems—making the processes faster, more reliable, and less prone to human error than traditional UI-based automation.
What makes RPA even more powerful at TrueAccord is its ability to run continuously, 24/7. Unlike human workers, bots don’t need breaks (both from a stamina aspect and a HR/legal aspect), and they can work around the clock, completing tasks whenever necessary. This constant availability, paired with their ability to handle large volumes of work, turns RPA into a digital workforce capable of handling countless processes simultaneously. For instance, TrueAccord runs 45 different processes through RPA, including posting over 60,000 direct-to-creditor payments each month on behalf of just one client. This would have normally required an army of humans, but with RPA, the task is completed efficiently and accurately without mistakes like “fat-fingering” data.
Enhancing Compliance and Customer Experience
Compliance is a significant focus in the debt collection industry, and TrueAccord takes it seriously. The use of RPA bots helps ensure that processes are executed consistently and in line with legal and regulatory requirements. For example, when a consumer requests to opt-out of a communication channel such as email or text message, the bots automatically process this request, ensuring that the consumer’s preferences are respected in real time. This helps TrueAccord remain compliant with regulations and provides a better experience for the consumer, as they don’t have to wait for a human to process their request.
Beyond compliance, RPA is also improving the consumer experience. For example, when consumers respond to a text message or email communications, RPA bots can automatically pause the account, allowing time for review and ensuring that the consumer’s issue is addressed promptly.
The Future of RPA at TrueAccord
TrueAccord is not stopping at just using RPA for backend processes; we’re exploring new frontiers by combining RPA with Artificial Intelligence (AI). By integrating AI with RPA, TrueAccord aims to create an intelligent, self-sufficient digital workforce. AI acts as the “brain,” interpreting consumer requests and generating responses, while RPA serves as the “muscle,” executing tasks like updating accounts, posting notes, and more.
This combination of AI and RPA has already shown significant results, such as faster response times and better consumer satisfaction. For example, where human agents might take days to respond to emails, AI-powered bots can provide answers in under 90 seconds, ensuring that consumers get quick and accurate responses. Over time, these innovations will continue to evolve, enabling even more intelligent and responsive automation.
TrueAccord’s RPA program is a testament to our commitment to innovation and efficiency. By developing our bots in-house with team members who understand our processes, we’ve created a robust and tailored system that truly makes a difference. We’re not just keeping up with the industry—we’re leading it.
APRIL 15 UPDATE: FCC GRANTS ACA’S PETITION TO EXTEND EFFECTIVE DATE
On April 7, 2025, the Federal Communications Commission FCC issued an order granting a limited waiver that extends the effective date —for a full year—to April 11, 2026 of the revocation provisions from the February 2024 Order. The specific rule section that is being delayed is 47 CFR § 64.1200(a)(10) of the Commission’s Order requiring businesses to treat a consumer’s reasonable revocation to revoke consent as revocation for all future calls and texts to that phone number. That specific section reads in part:
“A called party may revoke prior express consent, including prior express written consent, to receive calls or text messages made [using an autodialer as defined by the TCPA, using a prerecorded voice, or to a subscriber on the do not call registry] by using any reasonable method to clearly express a desire not to receive further calls or text messagesfrom the caller or sender.”
No other rules adopted in the February 2024 Order are changed by the delay. The FCC decided to make these changes after receiving a request to delay the effective date from ACA International and several other associations (ABA, AFSA, Mortgage Bankers), explaining the implementation complications for both larger institutions having multiple business units and systems and smaller institutions having more manual processes and third party vendors to coordinate. The FCC rules allow for the Commission to consider and order such changes upon special circumstances that warrant a deviation, like undue hardship, equity, or more effective implementation of overall policy. The Commission found good cause to push back the effective date due to the challenges all businesses face in processing revocation requests across multiple business units, systems, and vendors.
The extension gives businesses more time to do two things: (1) implement changes across systems, units, and vendors to operationalize the rule and (2) file a comment identifying the same provision as an unduly burdensome rule by the April 28, 2025 comment deadline for the Commission’s deregulatory initiative.
The blog post below was originally published on March 26, 2025 and has been updated to address the changes based on the new April 7, 2025 Order.
The Federal Communications Commission (FCC) is seeking public input on identifying FCC rules for the purpose of alleviating unnecessary regulatory burdens. In a public notice released March 12, 2025, the FCC announced the Commission is seeking comments on deregulatory initiatives to identify and eliminate those that are unnecessary in light of current circumstances. The FCC notice stated: “in addition to imposing unnecessary burdens, unnecessary rules may stand in the way of deployment, expansion, competition, and technological innovation.” Reply comments are due by April 28, 2025.
In the meantime, two FCC Orders that both impact the debt collection industry come into effect:
A 2024 Order released last February impacting revocation of consent to receive autodialed calls and texts and prerecorded or artificial voice calls. The 2024 Order conflicts with the CFPB’s Regulation F Debt Collection Rule about the scope of an opt-out.
And a 2025 Order released this past February aiming to strengthen call blocking of illegal calls. The 2025 Order may result in the blocking of lawful debt collection calls and texts.
Debt collectors and other companies impacted by these two orders may want to submit comments to the FCC identifying the particularly burdensome aspects that could be revisited and slightly revised to be consistent with consumer preference, consistent with other laws and regulations (like Regulation F), and less burdensome on companies.
Quick Note: These FCC rules are about the Telephone Consumer Protection Act (TCPA), which applies only to calls and texts made by an automated telephone dialing system (ATDS) and prerecorded or automated voice calls (aka robocalls or robotexts).1 If you do not use an ATDS to make calls or texts, and you don’t use prerecorded or automated voice calls, these Orders do not apply to your communications.
I. 2024 Order – Special Revocation Rules
On February 15, 2024, the FCC published an order adopting rules which impact text messaging and outbound dialing using an ATDS as well as calls made with prerecorded or automated voice. Most provisions of the Order take effect April 11, 2026.2 Those provisions include:
Consumers can revoke consent by “any reasonable manner”
If consent is revoked it applies to both “robo texts” and “robo calls”
Companies must process do-not-call and consent revocations requests within a reasonable period of time not to exceed 10 business days of receipt.
Originally these provisions were to take effect on April 11, 2025; however, in response to a petition from ACA International and other trade associations, the FCC on April 7, 2025 issued an order granting a limited waiver that gives companies an additional year to operationalize the revocation rules, changing the effective date to April 11, 2026. The Order also limited senders of text messages made using an ATDS to a one-time, revocation-confirmation text. This provision took effect in April of 2024.
a. Revoking consent is super flexible.
The FCC Order establishes that consumers may revoke prior express consent for autodialed or prerecorded/artificial voice calls and texts in any reasonable manner. This means that companies cannot designate an exclusive means to revoke consent that precludes the use of any other reasonable method.
A non-exhaustive list of “reasonable” ways a consumer can revoke consent include:
Request made using an automated, interactive voice, or key press-activated opt-out mechanism on a robocall
A response of “stop,” “quit,” “end,” “revoke,” “opt out,” “cancel,” or “unsubscribe,” or a similar, standard response message sent in reply to an incoming text message
Request submitted at a website or telephone number provided to process opt-out requests
If a sender uses a texting platform that does not allow two-way texting, the sender must clearly and conspicuously disclose in each text that (1) replying is unavailable and (2) provide the details of other reasonable alternative ways the consumer can revoke consent.
If a consumer uses any reasonable method to revoke consent, the FCC considers that consent to be definitively revoked, and future robocalls and texts from that company must be stopped.
Note that effective as of this April 11, 2025, a company must honor other revocation methods than key word replies to the text message. A consumer’s use of any other method to revoke consent, such as a voicemail to the sender’s telephone number or email address, creates a rebuttable presumption that consent has been revoked. If there is ever a dispute about whether a consumer reasonably revoked consent, the sender has the burden to show why they did not treat the consumer’s communication as a revocation.
b. Revocation applies to the number, not the channel.
The Order states that when consent for autodialed calls or texts is revoked, that revocation extends to both robocalls and robotexts regardless of the channel used to communicate the revocation. It is the FCC’s position that a consumer grants consent to be contacted at a particular wireless phone number or residential line, and therefore, consent revocation is an instruction to no longer contact the consumer at that number.
This FCC interpretation is different from the CFPB’s approach in Regulation F, which prevents debt collectors from contacting a consumer in a channel after the consumer opts out of communications in that channel. Under Regulation F, if a consumer opts-out from texts it does not require opting the consumer out of calls to that number. This FCC Order has a broader effect—if a consumer revokes consent to text by text, it requires opting the consumer out of all communications to that phone number (calls and texts).
c. Ten business days to process revocation.
The FCC now requires that companies honor opt-out/revocation requests within a reasonable period of time, not to exceed 10 business days of receipt. The FCC chose 10 business days since it was consistent with the timeframe to process revocation requests under the CAN-SPAM rules. However, the FCC made clear that it will continue to monitor advances in technology to see if faster processing times may be warranted in the future, and it explicitly stated “[w]e encourage callers to honor such requests as soon as practicable as a best practice.”
This particular provision is also at odds with the FDCPA, as the FDCPA does not contain language offering a reasonable processing time for opt-outs or any inbound requests (like cease and desist, notice of attorney representation, etc.). The CFPB did not provide any reasonable processing time for opt-outs in Regulation F.
II. 2025 Order – Enhanced Call Blocking Rules
On February 27, 2025, the FCC published an order seeking to strengthen the call blocking and robocall mitigation rules requiring all providers in the chain to block calls that are highly likely to be illegal based on a reasonable Do Not Originate (DNO) list. In the past, lawful debt collection calls have unfairly been blocked in these efforts. This Order has different effective dates but the earliest is May 2025.
a. Every provider must block illegal calls.
The FCC Order requires all providers in the call path to block calls that are “highly likely to be illegal” based on a reasonable DNO list. With this Order the FCC expands the requirement from prior Orders, now requiring all providers to block suspected illegal calls.
FCC does not mandate a particular list for providers to use. This is because providers know their own networks and may be better positioned to determine what types of numbers should be prioritized. As long as the provider can show that the list is reasonable, the provider will be in compliance with the Order. Providers must constantly update the lists and will want to show that their list is comprehensive to safeguard consumers.
This provision of the Order goes into effect 90 days after the order is published in the Federal Register. This order has not been published in the Federal Register as of the date of this blog post, but we should prepare for this rule to go into effect as early May 2025.
b. Special code for immediate notification of blocking to a caller.
The FCC has designed SIP Code 603+3 as the return call the provider must immediately use to notify callers when their calls are blocked based on “reasonable analytics.” This is the exclusive code for this purpose on IP networks. Using this code will ensure that callers learn when and why their calls are blocked based on reasonable analytics, which will allow these callers to access redress when blocking errors occur. This stems directly from the TRACED Act that requires the Commission to ensure that callers receive “transparency and effective redress” when their calls are blocked by analytics, and a single uniform code is the best way to achieve this transparency.
This requirement only applies when the call is based on analytics. If a call is blocked based on a DNO list, there is no requirement to provide immediate notification.
The Order further directs voice service providers to cease using the standard version of SIP code 603, or SIP codes 607 or 608, for this purpose.
The Order does not provide any additional protections for lawful callers because the FCC does not adopt any requirements for blocking based on reasonable analytics and the blocking notification rules adopted in the Order are expansions of our existing rules, rather than wholly new requirements. The Order states:
The record does not suggest that our current protections will be insufficient to protect lawful callers after these particular incremental expansions take effect. Moreover, and as discussed previously, we believe that the deployment of SIP code 603+ will provide significant benefit to callers that, when paired with our existing protections, are sufficient to protect the interests of callers.
This provision of the Order goes into effect 12 months (one year) after the order is published in the Federal Register. This order has not been published in the Federal Register yet, but it could go into effect as early March 2026.
c. No requirement to display caller name (yet).
The FCC declined to require the display of caller name information when a provider chooses to display an indication that caller ID has been authenticated. Although it does not adopt such a mandate, the FCC urges providers to continue to develop next-generation tools, such as Rich Call Data (RCD) and branded calling solutions, to ensure that consumers receive this information and welcome any updates industry has on its progress. The FCC noted that it may consider a mandate in the future, particularly if the timely deployment of such valuable tools does not occur without Commission intervention.
*This blog is not legal advice. Legal advice must be tailored to the particular facts and circumstances of each unique matter.
Citations:
An ATDS or autodialer under the TCPA is a system that has the capacity to use a random or sequential number generator to either store or produce phone numbers to be called. To learn more about this read this blog.
The Order also limited senders of text messages made using an ATDS to a one-time, revocation-confirmation text. This provision took effect in April of 2024.
A SIP (Session Initiation Protocol) code, also known as a SIP response code, is a three-digit numerical code used to indicate the status of a SIP request or transaction, similar to HTTP status codes.
In today’s digital communication landscape, businesses—especially those that use digital outreach to engage delinquent consumers to collect debts—are facing increasing pressure to ensure they respect consumers opting out of communications from a particular channel.
While the word “STOP” has been a widely recognized method for consumers to unsubscribe from text messages, the reality is that consumers may express their desire to opt out in various ways. And with the advent of accepting MMS (Multimedia Messaging Service) replies that allow for multimedia content like images, videos, and audio, along with longer text messages, consumers are bound to get creative.
The FCC is currently revising its rules as part of efforts to reduce unnecessary regulatory burdens, particularly those that affect automated communications like debt collection calls and texts—a shift in policy could influence how businesses, especially those in debt collection, approach consumer opt-out requests. Two FCC orders in particular have direct consequences for companies that rely on automated communications, including debt collectors:
1. The 2024 FCC Order:
Consumers can revoke consent for robocalls or robotexts in “any reasonable manner,” making it vital for businesses to broaden their opt-out options beyond a single keyword like “STOP.”
The revocation applies not only to the channel through which the request was made but also to any other forms of communication at that phone number.
Businesses must process these requests promptly, no later than 10 business days.
2. The 2025 FCC Order:
This order strengthens rules regarding call blocking, which may affect legitimate debt collection communications. It mandates that service providers block calls they deem “highly likely to be illegal,” based on their internal Do Not Originate (DNO) lists.
The risk is that legitimate calls could get mistakenly blocked, disrupting lawful debt collection efforts.
Going Beyond “STOP”: Why It’s Essential for Businesses
As these new FCC orders take effect, why else do businesses need to expand their opt-out processes? Let’s start by looking at existing regulations and requirements along with other factors that can impact an organization’s ability to engage consumers, collect debt, and ultimately their bottom line.
Compliance and Legal Risk: By honoring only “STOP,” companies may miss other legitimate opt-out expressions, risking violations of regulations like the Telephone Consumer Protection Act (TCPA) or the Fair Debt Collection Practices Act (FDCPA). Failure to comply can lead to legal consequences and damage to a business’s reputation.
Efficiency: In industries like debt collection, where high volumes of communication are involved, a flexible, automated opt-out process can ensure that no consumer request is overlooked. Implementing technology to track and process these requests quickly is key to maintaining a streamlined, efficient operation.
Technology and Innovation: The digital age demands businesses use advanced technology to manage consumer interactions effectively. Automating the opt-out process ensures that all channels are updated in real time, avoiding mistakes and minimizing delays.
Consumer Trust: Consumers are more likely to engage with a company that respects their preferences and responds to opt-out requests quickly. Offering various opt-out methods and honoring them promptly can significantly improve customer experience.
TrueAccord Leads the Way in Opt-Out Efficacy and Efficiency with RPA Bots
At TrueAccord, we understand that consumer opt-out preferences must be managed with the utmost care. Using Robotic Process Automation (RPA) and artificial intelligence to automate back-office operations helps ensure compliance, improved customer experience, and a more cost-effective way to engage and collect.
Automated Opt-Out Recognition: While many companies recognize the word “STOP” as an opt-out request, TrueAccord’s system goes further. We use AI tools to scan incoming messages for not just “STOP,” but also for variations like “revoke,” “quit,” “cancel,” and even unusual or colorful expressions of dissatisfaction. If a message contains any of these keywords, the bot automatically processes the opt-out request by unsubscribing the consumer from the SMS channel.
Real-Time Compliance: Our system, powered by HeartBeat—TrueAccord’s patented machine learning engine—ensures that consumer preferences are respected. If a consumer opts out of one communication channel, we ensure that all future communications to that particular channel are paused, preventing any further contact that could lead to complaints or violations.
RPA Efficiency: Thanks to our RPA bots, tasks that once took hours or even days for human employees to manage are now completed in a matter of minutes. For example, our bots can process large volumes of responses, automatically unsubscribing consumers or flagging accounts for further review, reducing the time needed to comply with opt-out requests and ensuring that no request goes unnoticed.
Advanced Reporting and Monitoring: We don’t just automate the opt-out process—we also track and report on all consumer interactions. This allows us to maintain a detailed audit trail for compliance purposes, ensuring that all opt-out requests are processed promptly and accurately.
TrueAccord is committed to staying ahead of regulatory changes and technological advancements. As the FCC’s rules continue to evolve, we are constantly refining our processes to ensure we are not only compliant but also providing an exceptional consumer experience.
What Does This Fish Mean to You? Navigating Opt-Outs Through MMS
When it comes to consumers opting out of receiving TrueAccord communications through MMS, consumers can truly get creative: photos, memes, emojis, songs, selfies, and more. While text-based responses can be scanned and filtered, MMS is trickier.
For MMS, the reviews need that human set of eyes. Why? Let’s use this actual consumer reply to a text message from TrueAccord that included the standard “STOP to opt-out” language:
What does this fish mean to you? Specifically in the context of debt collection communications with a business, what action do you think the consumer is trying to invoke?
While there are plenty of words and phrases you can program into a filter or scanner, this fish is not as easy to decipher the meaning. Automation takes the burden of basic reviewing off the shoulders of agents and allows bandwidth for examining the more creative responses and handling them appropriately.
So if your debt collection partner is only using a rudimentary scanner for opt-outs, it’s likely that unique opt-out requests are falling through the cracks—and that’s if that partner even has an automated process to manage replies and responses in the first place.
For businesses looking for a debt collection partner, this is a differentiator between choosing TrueAccord versus a competitor—our system is built on code-based compliance which allows us to communicate with consumers at a scale that’s unimaginable from traditional call-and-collect or DIY collection programs. The more traditional operations that do not have these automated processes are also unable to keep up with the variety of replies consumers send to opt-out. Even if they have automation to send out mass volumes of emails or text messages, do they have automation to handle the volume of replies within regulatory timelines? Do they actually offer efficiency and scalability—or are they opening you up new compliance risks around opt-outs?
Opt-In to a More Efficient and Effective Debt Collection and Consumer Communication Process
In the ever-evolving landscape of consumer protection and compliance, businesses must be proactive in managing opt-out requests. It’s no longer enough to rely on a single keyword like “STOP.” As consumer expectations and regulatory requirements evolve, so too must the tools and technologies used to manage opt-outs. TrueAccord’s cutting-edge automation and machine learning technology leads the way in ensuring that consumer preferences are respected, compliance is maintained, and operations remain efficient.
By embracing a more comprehensive, technology-driven approach to managing opt-outs, businesses can build trust with their customers, reduce legal risks, and stay ahead of the regulatory curve.
Ready to opt-in to a more efficient and effective debt collection and consumer communication process? Schedule a consultation today»»
Debt collection is a complex, evolving industry, and compliance with the myriad of federal, state, and local laws is an ongoing challenge for organizations in the field. These laws create a “patchwork” of rules and regulations that can vary widely depending on the jurisdiction, presenting challenges for those trying to maintain compliance and provide effective, consumer-friendly services.
Layers of Laws and a Patchwork of Regulations: Federal, State, Local
The complexity of debt collection laws begins with the different layers of laws and regulations that businesses must adhere to. At the federal level, there are laws such as the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA), and agencies like the Consumer Financial Protection Bureau (CFPB) and the Federal Communications Commission (FCC) issue important rules and guidelines that debt collectors must follow. These federal laws and rules provide a broad framework, but when you layer on state and local laws and regulations, designing compliance with multiple competing frameworks becomes more complicated.
For example, no consumer privacy law currently exists at the federal level, however, many states do have consumer privacy laws that provide consumers with the right to know what information is being collected about them, and the right to request that companies correct and/or delete their data. Some states provide an entity-level exemption to their privacy law (e.g., Colorado, Connecticut, Virginia) if a company is subject to the federal Gramm-Leach-Bliley Act (GLBA); however, other states may scope the exemption differently (e.g., California’s exemption is a data-level exemption, not an entity-level exemption). Depending on how a particular state shapes its laws, businesses and collectors must determine how to approach compliance in a way that harmonizes its policies and practices to comply with a patchwork of state laws governing privacy.
Sometimes, even federal laws create a patchwork of requirements, such as the FCC’s mandate regarding opt-out requests. The FCC has specified that opt-outs must be processed within a “reasonable” period of time not to exceed 10 days; while on the other hand, when it comes to debt collection and the CFPB’s Regulation F, a reasonable time frame for processing opt-outs is not defined, suggesting that opt-outs must be processed immediately. This leaves businesses and agencies with a conundrum—do you follow the more lenient 10-day window and potentially strain consumer relationships if further outreach occurs within that window, or spend the additional resources to ensure immediate opt-outs?
An additional layer of complexity comes from the different federal circuit courts in the United States. With 11 circuits, each containing multiple district courts, a ruling in one district may only be authoritative for that district. However, it may serve as persuasive authority for other jurisdictions. This decentralized legal landscape means that organizations must keep track of rulings that could affect how laws and regulations are interpreted in different regions. Even though not all court rulings carry the same weight across the country, they can still influence how the law evolves, and businesses like TrueAccord must stay informed of these rulings to adjust their practices accordingly.
Turning Compliance Challenges into Opportunities
The patchwork of laws and regulations presents an ongoing challenge, but at TrueAccord, we view this complexity as an opportunity. By staying actively involved in industry trade associations like the American Collectors Association (ACA) and Receivables Management Association International (RMAI), TrueAccord ensures it has a pulse on the latest developments. In addition to being part of these associations, TrueAccord leaders also participate in industry committees, allowing for deeper involvement on specific legal topics shaping the industry.
It’s not just about staying current within the debt collection industry; looking to related industries can also provide a competitive advantage. For example, when the CFPB first came around, it borrowed many of its compliance concepts and requirements from the banking industry, which had been dealing with regulatory compliance for years. By keeping an eye on what’s happening in sister industries, TrueAccord has been able to anticipate changes before they hit the debt collection world and be proactive in its approach.
An example of this proactive approach can be seen with the CAN-SPAM Act and opt-out requirements. While CAN-SPAM does not apply to the sending of debt collection emails, TrueAccord nonetheless looked at CAN-SPAM for best practices when it was designing its compliance policies around sending debt collection emails. Because of this, TrueAccord had adopted the policy of adding an opt-out to all outgoing debt collection emails before it was a requirement of Regulation F. When Regulation F mandated it, TrueAccord was already in compliance.
Be Prepared to Stay Ahead of the Compliance Curve with the Right Collections Partner
For businesses evaluating debt collection agencies, it is imperative to ask critical questions about how those agencies stay up to date on legal and regulatory changes. How do they manage change? How do they stay informed about new rules and updates? The answers to these questions will give businesses insight into how well a debt collection agency is equipped to navigate an ever-evolving compliance environment.
As we’ve seen, the patchwork of debt collection laws—spanning federal, state, and local jurisdictions—presents an ongoing challenge for businesses. However, TrueAccord’s commitment to staying ahead of the game through active participation in industry associations, tracking legal rulings and regulatory updates, and applying a holistic compliance management system ensures that we remain at the forefront of industry trends, laws, and regulations. By continuously adapting to changes and leveraging insights from across industries, TrueAccord not only stays compliant but also advocates for a more cohesive, forward-thinking regulatory environment. For businesses evaluating debt collection agencies, understanding how those agencies manage compliance and change is a key factor in choosing the right partner.
Striving to deliver positive consumer experiences is not just a best practice—it is becoming a more prominent component of compliance in debt collection, especially when it comes to consumer communication. As consumer preferences have shifted toward digital channels, the success of a business’s debt recovery operation (whether in-house or outsourced to a third-party agency) hinges on engagement through online platforms, emails, and text messaging.
However, without proper design or planning, digital outreach can cross a fine line becoming manipulative or even deceptive. These practices are known as “dark patterns,” and they can cause significant harm to both consumers and businesses. The danger of dark patterns lies not just in the unethical manipulation of users but in the long-term consequences of such tactics, from damaged consumer trust to legal ramifications.
But what exactly constitutes a dark pattern in digital communication? Let’s look at the official definitions and examples, the risks they pose to consumers, the consequences businesses can face, how to avoid inadvertent dark pattern design, and how TrueAccord has approached delivering consumer-centric debt collection communications since day one.
What Are Dark Patterns? Examples, Risks, & Consequences
Dark patterns are design practices that mislead or manipulate consumers into taking actions that do not align with their true intent or preferences. These tactics typically exploit psychological triggers, confusing language, and hidden choices to push users toward making decisions they might not otherwise make.
In recent years, dark patterns have drawn increased scrutiny from federal and state regulators. The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have made it clear that such practices are not just unethical but also illegal. According to the FTC, dark patterns are considered “unfair or deceptive” business practices under Section 5 of the FTC Act. In 2022, the FTC published a report titled “Bringing Dark Patterns to Light,” highlighting these manipulative tactics and the growing enforcement against them. The report honed in on four common dark pattern tactics:
Burying key terms and junk fees
Making it difficult to cancel subscriptions or charges
Tricking consumers into sharing data
Misleading consumers and disguising ads
In addition to the focus areas within the FTC’s report, some other examples of dark patterns in digital communication include:
Confirm-shaming: Using guilt-inducing language to discourage consumers from unsubscribing or opting out, such as “Are you sure you want to miss out on this exclusive offer?”
Trick buttons: Designing “unsubscribe” buttons to look like “continue” or “learn more” buttons, leading users to click on something they didn’t intend to.
Urgency tactics: Creating a false sense of urgency by suggesting a limited-time offer is about to expire, even when it isn’t.
Pre-checked boxes: Adding pre-ticked boxes for additional services or subscriptions, requiring users to actively opt-out to avoid unwanted charges.
These tactics are not just annoying for consumers—they also undermine trust in the brands that use them. In the context of debt collection, where trust is already fragile, dark patterns can have a particularly devastating impact. Dark patterns can cause businesses to lose credibility, customer loyalty, the ability for communications to get delivered through digital channels, and even revenue. When consumers feel manipulated, they may report a company’s emails as spam, impacting deliverability and overall the effectiveness of digital engagement.
The risks of dark patterns go beyond consumer dissatisfaction and lower email open rates—they can lead to significant legal and financial consequences. Various laws, including the Consumer Protection Act of 2019 and regulations by the California Privacy Protection Agency, explicitly prohibit the use of dark patterns in obtaining consent for data collection. Violating these laws can result in penalties, along with further damage to a company’s reputation in the eyes of the consumer.
In the long run, the use of dark patterns in digital communication risks creating a negative feedback loop: the more consumers feel misled, the less likely they are to engage with the business, and the less effective digital communications will be. This is why it’s crucial for companies to adopt transparent, user-friendly practices.
How to Avoid Dark Patterns
Avoiding dark patterns is not just about following the law—it’s also about fostering trust and transparency with consumers. Here are some key strategies to ensure your digital communications are free from manipulation:
Be Transparent: Clearly disclose all costs, fees, and terms. If there are any charges involved, they should be easy to find and understand.
Use Clear, Honest Language: Avoid language that might mislead or confuse consumers. Be direct and straightforward.
Avoid Manipulative Language: Never use guilt-tripping or fear-inducing tactics to push consumers into decisions.
Simplify the Decision-Making Process: Make it easy for consumers to make informed decisions by avoiding “choice architecture” that limits their ability to make fair choices.
Provide Symmetry in Choice: Ensure that privacy-protective options are as easy to select as less secure alternatives.
Make it Easy to Opt-Out: Ensure that unsubscribe links or opt-out buttons are clearly visible and easy to use, without hidden steps or confusing layouts.
How TrueAccord Leads the Way in Compliant Consumer Communications in Debt Collection
At TrueAccord, we take pride in being a leader in ethical and compliant digital communication since our inception in 2013. We’ve always believed that transparent, user-friendly communication builds trust, which ultimately leads to better resolutions for consumers and better repayment rates for businesses.
We make a concerted effort to ensure that our communications are free of dark patterns by focusing on both the design and messaging of our digital interactions. Our emails and text messages are carefully crafted to follow modern user experience (UX) standards, ensuring that they are clean, clear, and easily understood.
Brand Consistency: Every message we send out follows consistent branding with the right colors, fonts, and logos. This helps consumers recognize us as a legitimate company and reduces the risk of being mistaken for a phishing scam.
Clear Messaging: We prioritize clarity in our messaging. We make sure that everything we say is relevant, easy to understand, and free from confusing jargon or manipulative language.
Error-Free Communication: We carefully review our content for any spelling or formatting errors. Consumers often make snap judgments about the legitimacy of a message based on visual cues, so it’s crucial to maintain a professional appearance.
Easy Navigation: All our links work, and consumers are always redirected to the correct pages. If there’s ever an issue, we flag it quickly to ensure that the consumer experience remains seamless.
Compliance and Trust: We are committed to being fully compliant with regulations, but more importantly, we focus on building trust with the consumer. By providing clear, actionable, and honest communication, we can help consumers navigate their debt repayment process more effectively.
Moreover, our commitment to transparency ensures that every communication we send out, whether via email or mobile, is accompanied by clear disclosures to further legitimize our efforts and foster a stronger relationship with the consumer.
As mentioned above, a lot of the regulations that have come out specifically about dark patterns have been in recent years. But with over a decade of experience in digital debt collection, it has always been our duty at TrueAccord to ensure we are not inadvertently causing dark patterns in communications or any part of the repayment process—not because it’s a compliance requirement but because we know that when a consumer trusts and engages with your communications, you have better liquidation results.
Don’t Risk Dark Patterns—Partner with Experts in Collections & Compliance
Dark patterns are a serious issue in digital communication, and while they may offer short-term gains, they can have long-lasting consequences on a company’s reputation, legal standing, and customer trust. By avoiding these deceptive practices and focusing on transparent, honest, and user-friendly communications, businesses can build stronger relationships with their customers and avoid the legal pitfalls associated with dark patterns.
At TrueAccord, we have always been at the forefront of recognizing the importance of ethical communication in debt collection. By prioritizing transparency, trust, and compliance, we not only ensure a better experience for consumers but also achieve better results for our clients. After all, when consumers trust the process, they are more likely to engage and succeed in resolving their debts—making for a better outcome for everyone involved.
Over the past several years, federal and state regulators have started raising red flags about a significant trend in the debt collection industry: companies failing to deliver positive experiences for consumers or properly manage complaints and disputes. With growing scrutiny from agencies like the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and even the White House, it’s clear that ensuring a good consumer experience is no longer just a best practice—it’s a compliance requirement.
As we move further into 2025, it’s essential for debt collectors and businesses to find the balance between adhering to the myriad of regulations while maintaining a smooth and positive consumer experience through the repayment process. And while digital communication channels have become increasingly favored by consumers, mass blast emails and SMS campaigns don’t equal rave reviews or recovery rates.
Add on evolving compliance regulations and the modern debt collection challenges mount. While 2024 saw different governing bodies and providers make progress handing down guidelines and best practices for better consumer experience overall, regulations and legislation is still not always 100% clear on what is and is not acceptable for compliance.
So how can your debt collection strategy keep up with the 2025 compliance and consumer preference landscape? Let’s look at ways to navigate the challenges and increase liquidation rates as a result.
Staying on Top of the Shift Toward a Consumer-Centric Compliance Model
Traditionally, compliance in debt collection focused primarily on following established regulations, such as the Fair Debt Collection Practices Act (FDCPA) and Regulation F. However, recent regulatory actions are increasingly examining how businesses interact with consumers beyond the letter of the law and have emphasized that poor consumer experiences can even trigger legal violations. If a debt collector fails to manage complaints and disputes properly, it could result in potential violations of the Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) standards, or even the Dodd-Frank Act.
Even the use of emerging technologies is being scrutinized through the consumer experience lens: the CFPB has highlighted concerns over poorly monitored artificial intelligence (AI) or machine learning, specifically when it comes to consumer interactions. A poorly designed or maintained automated messaging system can lead to consumers getting “stuck” in automated loops, resulting in complaints and potential regulatory scrutiny or even rise to the level of a compliance issue.
Another area of increasing consumer frustration can be the process of opting out from receiving further digital communications. Automated messages that give consumers the ability to remove themselves from receiving further communications by replying “STOP” but do not account for a range of possible opt-out requests or replies can lead to complaints and trigger regulatory action.
The lesson is clear: compliance is not just about ticking boxes—it’s about delivering a consumer experience that’s transparent, responsive, and respectful. And with a smart approach, businesses can use technology to minimize compliance risk while enhancing the consumer experience.
Best Practices to Strike Balance Between Compliance and Consumer Experience
Understanding this focus shift and the nuances of ever-unfolding regulations still leaves us with the original question: how can your debt collection strategy keep up with the 2025 compliance and consumer preference landscape? While it is imperative to follow all laws and requirements in the collections industry, following the best practices below can help your organization prepare and provide the best consumer experience through the delinquency lifecycle as the regulatory landscape continues to evolve:
Implement robust compliance oversight programs, particularly when scaling digital outreach efforts
Establish clear policies and procedures around the use of AI, machine learning, and other emerging technologies in debt collection and digital communication, and continuously assess their impact
Map and monitor outreach across all communication channels holistically, ensuring that consumers do not get “stuck” in a loop or experience any disruption in their communication
Ensure any messaging systems appropriately handle variations in opt-out requests (like we mentioned above, “STOP” is just one way consumers might convey their opt out of SMS)
Automation can be used not only to send messages but also to ensure that every piece of communication complies with the necessary regulations
Partner with debt collection agencies that have experience successfully using digital communications compliantly
The key is to adopt a comprehensive approach that blends technology, consumer insights, and compliance best practices. By leveraging digital tools to monitor communications, mapping out consumer journeys, and staying vigilant with AI and machine learning systems, businesses can maintain compliance without sacrificing the quality of the consumer experience.
And TrueAccord has a proven track record as an industry leader in digital-first debt collection from both a compliance and consumer experience perspective.
The TrueAccord Difference
To start, TrueAccord is a licensed, bonded, and insured collection agency in all jurisdictions where we collect. We ensure compliance control, auditability, and real-time updates for changing rules and regulations, as well as adapting to shifting trends in consumer preference and behavior.
Take the example from earlier about consumer frustration trying to opt-out: at TrueAccord, we’ve found that only 7% of consumers use the word “STOP” to opt out of SMS communications—but our team and machine learning engine, HeartBeat, account for the many other phrases consumers may use to opt-out, staying compliant and reducing consumer friction.
It’s important to remember that most compliance rules were written for the benefit of consumers. As we’ve seen from today’s consumer-centric compliance guidelines, the better we comply, the better the consumer’s experience should be.
Direct mail is the old-school method for reaching consumers regarding their debt, but over time several factors have reduced the effectiveness of letters in collection communications—consumer preference and cost being the most prevalent. But specific state compliance regulations and other use cases prove that “snail mail” still has its place in the omnichannel mix.
When are Letters Necessary in Collection Communications?
While the cost of physically mailing letters may be a deterrent to snail mail, businesses benefit when direct mail is used to meet compliance requirements. We’ll go into more detail around regulations in the next section.
Another benefit of mailing letters is most apparent when the delinquent account does not have a valid email address or phone number on file. Letters ensure that these individuals still receive crucial notifications regarding their accounts, preventing any potential oversight, and provide essential information related to their debt in a clear and organized manner.
Additionally, the formality of letters can be necessary to help raise awareness of outstanding debt for consumers that may not be as trusting of digital communications and choose to ignore phone calls. This is especially true for those who may not be as computer savvy or familiar with online financial transactions.
And just like with all other communication channels in debt collection, consumer preference also plays a role but in an even greater way with traditional letters: if a consumer clearly states that they only want to be contacted through physical mail (either to them directly or to their legal representation), businesses and collectors must abide. These types of requests lead to the main use case for letters…
The Main Use Case for Snail Mail: Compliance
The primary use case for using the direct mail channel is for compliance. Several laws, regulations, and governing bodies—including the Fair Debt Collection Practices Act (FDCPA), Regulation F, Consumer Financial Protection Bureau (CFPB), among others—define how, when, and what needs to be included in consumer communications around debt collection, and letters were the original initial compliant consumer communication.
Yet the prevalence of digital has forced these regulations to evolve, and today there is no federal law requiring consent to communicate via email vs direct mail.
But there are some exceptions to this general rule:
Some states/jurisdictions require consent to communicate via email and text, which must be obtained through physical letters and documentation.
In some instances, consent to send legally required notices electronically must also be obtained through physical mail.
Some states require certain legally required notices to be mailed.
See Success and Real World Results with TrueAccord
Understanding the nuances of compliance and when communications fall under certain laws can be challenging without legal experts keeping a finger on the pulse of these evolving regulations—but TrueAccord ensures success with code-based compliance so all our engagement channels meet the requirements for each unique account’s circumstance and know when letters are the right choice for outreach.
While our omnichannel strategy is digital-first, we understand that digital isn’t always the best or most viable option to connect with some consumers. Knowing when, where, and why a letter might be the ideal choice for consumer communication helps TrueAccord and our clients remain compliant and cost-effective. Depending on a consumer’s location and contact information, a letter may be the best bet to garner engagement.
With advanced code-based compliance and scrubbing capabilities, TrueAccord’s omnichannel approach proves even snail mail can still be effective in collections.
Looking at key economic indicators—GDP growth, consumer spending, softening inflation and a healthy job market—it would be easy to deduce that consumers in America are faring well. But digging deeper reveals unwieldy debt, expected rises in charge-offs and uncertainty around future economic conditions, painting a less rosy picture of the financial situation.
Consumers certainly faced challenging economic conditions in 2024, but despite record-high credit card balances and delinquency rates, Americans continued spending, accumulating even more debt this holiday season. Data shows that more than a third of shoppers took on additional debt for the holidays, borrowing $1,181 on average, and that 47% of consumers still carried debt from the 2023 holiday season. With inflation proving more sticky than policymakers had hoped and uncertainty around how the new administration’s policies might affect it, it may take longer for people to see lower interest rates on their mortgages, car loans and credit card balances, which could prove challenging to household budgets.
The good news for lenders and debt collectors is that a reported 72% of consumers have a New Year’s resolution to pay off debt in 2025. The challenges will be effectively engaging consumers who want to repay and accommodating their strained budgets. We are entering a year of unknowns across the board, from potential regulatory changes to economic fluctuations to varying consumer sentiments, and there’s a lot to consider as it relates to debt collection in 2025.
What’s Impacting Consumers?
While inflation isn’t cooling dramatically, it also isn’t showing signs of speeding back up. December’s inflation reading didn’t bring any big surprises to close out 2024—the consumer price index (CPI) increased 0.4% on the month, putting the 12-month inflation rate in line with forecasts at 2.9%. The core CPI annual rate, which discludes volatile food and fuel prices and is a key factor in policy decisions, notched down to 3.2% from the month before, slightly better than forecasted.
Despite the nagging inflation and still-elevated borrowing rates, the job market remains resilient, with employers adding 256,000 jobs in December, nearly 100,000 more than economists expected. The unemployment rate in December ticked down to 4.1%, lower than the forecasted steady rate.
The Federal Reserve started cutting rates in September 2024 and lowered its benchmark for a third straight month in December based on signs that the economy was slowing down. But the healthy December jobs report combined with lingering inflation supports the Fed’s intention to move forward with a slower pace of rate cuts this year—it is now penciling in only two quarter-point rate cuts in 2025, down from the four it forecasted in September.
In November, the Fed released its Quarterly Report on Household Debt and Credit for Q3, which showed total household debt increased by $147 billion (0.8%) in Q3 2024, to $17.94 trillion. The report also showed that credit card balances increased by $24 billion to $1.17 trillion, with the average U.S. household owing $10,563 on credit cards going into the Q4 holiday shopping season. According to Experian’s Ascend Market Insights, at the end of November, 5% of consumers had total balances over their limits and 11% of consumers had a high utilization of 81-100%.
Experian’s Ascend Market Insights from November also showed overall delinquent balances (30+ DPD) decreased by 3.78% while up on unit basis by 1.61%. This net was driven by decreases in delinquent first mortgage and unsecured personal loan balances, which were offset by increases in delinquent bankcard balances and on a dollar basis in delinquent second mortgages.
Meanwhile, millions of Americans may see significant changes to their credit reports in the coming months if they have either unpaid medical bills or student loans, but the effects of each are opposite.
Since March 2020, delinquent student loan borrowers have been exempt from credit reporting consequences, but the required payments resumed in October 2024. As a result, an estimated 7 million borrowers who have fallen behind on their federal student loan payments or remain in default will start seeing negative credit reporting in the coming months if they don’t resume payments.
Conversely, for the roughly 15 million Americans with unpaid medical bills, a new rule from the Consumer Financial Protection Bureau (CFPB) will ban and remove at least $49 billion in medical debt from consumer credit reports and prohibit lenders from using medical information in their lending decisions, providing a boost to credit scores and financial access.
CFPB Looks at Medical Debt, Student Loans and So Much Data
Medical debt wasn’t the only focus for the Consumer Financial Protection Bureau in Q4. In addition to specific actions targeting offenders in the consumer financial services industry, the CFPB announced myriad other topics of interest to close out 2024 with a sharp focus on protecting consumers and their data.
At the end of October, the CFPB finalized a personal financial data rights rule that requires financial institutions, credit card issuers and other financial providers to unlock an individual’s personal financial data and transfer it to another provider at the consumer’s request for free, making it easier to switch to providers with superior rates and services. The rule will help lower prices on loans and improve customer service across payments, credit and banking markets by fueling competition and consumer choice.
In November, the CFPB issued a report detailing gaps in consumer protections in state data privacy laws, which pose risks for consumers as companies increasingly build business models to make money from personal financial data. The report found that existing federal privacy protections for financial information have limitations and may not protect consumers from companies’ new methods of collecting and monetizing data, and while 18 states have new state laws providing consumer privacy rights, all of them exempt financial institutions, financial data, or both if they are already subject to the federal Gramm-Leach-Bliley Act (GLBA) and the Fair Credit Reporting Act (FCRA).
Then, the Bureau finalized a rule on federal oversight of digital payment apps to protect personal data, reduce fraud and stop illegal debanking. The new rule brings the same supervision to Big Tech and other widely used digital payment apps handling over 50 million transactions annually that large banks, credit unions and other financial institutions already face.
As 28 million federal student loan borrowers returned to repayment, the CFPB issued a report uncovering illegal practices across student loan refinancing, servicing and debt collection, identifying instances of companies engaging in illegal practices that misled student borrowers about their protections or denied borrowers their rightful benefits. This followed the release of their annual report of the Student Loan Ombudsman, highlighting the severe difficulties reported by student borrowers due to persistent loan servicing failures and program disruptions.
Uncertainty in Consumer Sentiment
The Fed’s Survey of Consumer Expectations from December showed that inflation expectations were unchanged at 3.0% for this year, increased to 3.0% from 2.6% at the three-year horizon, and declined to 2.7% from 2.9% at the five-year horizon. Reported perceptions of credit access compared to a year ago declined as did expectations about credit access a year from now. Additionally, the average perceived probability of missing a minimum debt payment over the next three months increased to 14.2% from 13.2% and was broad-based across income and education groups.
The November PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report” found that from September to October 2024, the share of consumers living paycheck to paycheck overall rose slightly from 66% to 67%. Surveyed cardholders said their outstanding credit balance is either holding constant or increasing—25% said their outstanding balance increased over the last year, while 55% said it stayed about the same. Moreover, many consumers, and especially those having trouble paying their monthly bills, report maxing out their cards regularly and using installment plans to cover basic necessities.
According to NerdWallet’s 2024 American Household Credit Card Debt Study, more than 1 in 5 Americans who currently have revolving credit card debt (22%) say they generally only make the minimum payment on their credit cards each month. And with credit card rates averaging 20%, interest costs could almost triple the average debt for those making minimum payments after factoring in interest expenses.
The University of Michigan’s index of consumer sentiment dropped to 73.2 at the start of January 2025 from 74.0 in December after views of the economy weakened on expectations of higher inflation in light of the new administration’s proposed tax cuts and new import tariffs. Unlike some of the polarization of recent months, which had seen more positive responses among Republicans than Democrats, January’s deterioration in economic expectations was seen across political affiliations. While consumers’ views of their personal finances improved about 5%, their economic outlook fell back 7% for the short run and 5% for the long run, with year-ahead inflation expectations jumping to 3.3%, up from 2.8% in December and the highest since May last year.
What Does This Mean for Debt Collection?
Over the next 12 months, debt collection companies expect an increase in account volume but a potential decrease in account liquidity, according to TransUnion’s latest Debt Collection Industry Report. If the goals are implementing strategic operational efficiencies and improving the consumer experience to facilitate debt repayment, the means to the ends include investing in technologies like artificial intelligence, solving for scalability, and optimizing communication channels and consumer self-service engagement. For lenders and collectors, here are some recommendations for your debt collection strategy in 2025:
Scalability, Go Big or Go Home. Higher account volume calls for operations that can scale cost-effectively while offering the right consumer experience. Embracing smart technology is your best bet to keep up, and figuring out when to buy tech-enabled products and services versus when to invest in building it yourself will be key to making it work.
Reduce Friction for Consumers.Self-service portals in collections reduce friction and foster a sense of autonomy for consumers to manage their debt without the pressure or inconvenience of interacting with a call center agent. Besides creating a more streamlined experience for the consumer, organizations will also benefit from associated cost-savings, compliance controls and scalability.
Compliance Changes, Adapt or Perish. The debt collection industry experienced notable legal and compliance changes in 2024, including important litigation outcomes and updates to digital communications regulations, and keeping up with more changes to come will be critical to your business. Join our Legal and Compliance Roundup webinar on Jan. 29 to learn about the latest developments and how they will shape strategies and industry practices in 2025. Register here: https://bit.ly/4h4tacd
The big inflation situation plaguing the U.S. for the past three years seems to be coming to an end, and it could be that American consumers are partially to thank. Tired of paying higher prices, consumers increasingly turned to cheaper alternatives, bargain hunted or simply avoided items they found too expensive, pressuring retailers to accommodate them or lose their business. That’s not to say Americans have stopped spending altogether—the economy continues to expand and people continue to struggle against inflated prices for necessities across the board, often still turning to credit cards to make ends meet.
With consumers setting the demand amidst elevated prices and inflation declining slowly, retailers have gotten an even earlier jump on holiday promotions this year in the hopes of boosting sales in a price-wary environment. Spreading holiday expenses out over a longer period of time may ease the financial burden slightly, but the cumulative dollars spent will still weigh heavily on consumer finances for Q4 and rolling into 2025. The National Retail Federation is forecasting that winter holiday spending is expected to grow between 2.5% and 3.5% over last year, with a total reaching between $979.5 billion and $989 billion.
We are starting to feel an economic shift, but what does this all mean and what’s the outlook for the end of the year? Read on for our take on what’s impacting consumer finances, how consumers are reacting and what else you should be considering as it relates to debt collection today.
What’s Impacting Consumers?
While not the straight line decline economists would like to see, the September results show that inflation is slowly and steadily easing back to the Federal Reserve’s 2% target. After several months of decreasing inflation and amid slowing job gains, the Fed in September announced the first in a series of interest rate cuts, slashing the federal funds rate by 1/2 percentage point to 4.75-5%. Federal Reserve Chair Jerome Powell indicated that more interest rate cuts are in the plans but they would come at a slower pace, likely in quarter-point increments, intended to support a still-healthy economy and a soft landing.
The rate cut plans have been made possible by consistently declining inflation. The Consumer Price Index rose just 2.4% in September from last year, down from 2.5% in August, showing the smallest annual rise since February 2021. Core prices, which exclude the more volatile food and energy costs, remained elevated in September, due in part to rising costs for medical care, clothing, auto insurance and airline fares. But apartment rental prices grew more slowly last month, a sign that housing inflation is finally cooling and foreshadowing a long-awaited development that would provide relief to many consumers.
The September jobs report supported the economic optimism by adding a whopping 254,000 jobs, far exceeding economists’ expectations of 140,000. The unemployment rate lowered to 4.1%, below projections of remaining steady at 4.2%. The government has also reported that the economy expanded at a solid 3% annual rate Q2, with growth expected to continue at a similar pace in Q3. This combination of downward trending interest rates and unemployment plus an expanding economy is great news for consumers and businesses alike, and can’t come soon enough for many financially strained Americans.
Coming out of Q2, total household debt rose by $109 billion to reach $17.80 trillion, according to the latest Quarterly Report on Household Debt and Credit. This increase showed up across debt types: mortgage balances were up $77 billion to reach $12.52 trillion, auto loans increased by $10 billion to reach $1.63 trillion and credit card balances increased by $27 billion to reach $1.14 trillion.
Unsurprisingly, delinquency and charge-off rates ticked up as consumers struggled against still relatively high prices and interest rates. In mid-September, shares of consumer-lending companies slid after executives raised warnings about lower-income borrowers who are struggling to make payments. Delinquency transition rates for credit cards, auto loans and mortgages all increased slightly, with a steeper increase in flow to serious delinquency for credit cards, up more than 2% over last year from 5.08% to 7.18%. This kind of delinquency can be especially difficult for consumers to recover from given the record-high credit card rates many are stuck with.
While still low by historical standards, the mortgage delinquency rate was up 3 basis points in Q2 from the first quarter of 2024 and up 60 basis points from one year ago. The delinquency rate for mortgage loans increased to a seasonally adjusted rate of 3.97% at the end of Q2, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey, an increase that corresponded with a rise in unemployment and showed up across all product types.
For those with student loans, September marked the end of the ‘on-ramp’ to resuming payments, which was the set period of time that allowed financially vulnerable borrowers who missed payments during the first 12 months not to be considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies. However, the grace period is over and anyone who doesn’t resume making student loan payments in October risks a hit to their credit score—we will see these delinquencies reported in Q4.
Financial Protection for Consumers Across the Board
The Consumer Financial Protection Bureau (CFPB) continued with a high level of activity through the summer. Along with taking action against more than a handful of financial services companies in the name of consumer protection, the agency made headway on myriad other issues.
To kick off Q3, the CFPB published Supervisory Highlights sharing key findings from recent examinations of auto and student loan servicing companies, debt collectors and other financial services providers that found loan servicing failures, illegal debt collection practices and issues with medical payment products. The report also highlighted consumer complaints about medical payment products and identified concerns with providers preventing access to deposit and prepaid account funds.
Then, the CFPB and five other agencies issued a final rule on automated valuation models. The agencies, including the OCC, FRB, FDIC, NCUA, and FHA designed the rule to help ensure credibility and integrity of models used in valuations for certain housing mortgages. The rule requires adoption of compliance management systems to ensure a high level of confidence in estimates, protect against data manipulation, avoid conflicts of interest, randomly test and review the processes and comply with nondiscrimination laws.
Next, the CFPB joined several other federal financial regulatory agencies to propose a rule to establish data standards to promote “interoperability” of financial regulatory data across the agencies. The proposal would establish data standards for identifiers of legal entities and other common identifiers.
Also in August, the CFPB responded to the U.S. Treasury’s request for information on the use of artificial intelligence in the financial services sector. The CFPB emphasized that regulators have a legal mandate to ensure that existing rules are enforced for all technologies, including new technologies like artificial intelligence (AI) and its subtypes. It’s clear that the CFPB has an interest in how those technologies are used and what the consumer impact may be.
In September, the bureau issued its annual report on debt collection, which highlighted aggressive and illegal practices in the collection of medical debt and rental debt. The report focused on improperly inflated rental debt amounts and on debt collectors’ attempts to collect medical bills already satisfied by financial assistance programs, also noting that many medical bills from low-income consumers do not get addressed by financial assistance in the first place.
Finally, the CFPB published guidance to help federal and state consumer protection enforcers stop banks from charging overdraft fees without having proof they obtained customers’ consent. Under the Electronic Fund Transfer Act, banks cannot charge overdraft fees on ATM and one-time debit card transactions unless consumers have affirmatively opted in.
Disjointed Consumer Sentiment Weighs Heavy
A September Consumer Survey of Expectations found that Americans anticipated higher inflation over the longer run as their expectations of credit turbulence rose to the highest level since April 2020, according to the Federal Reserve Bank of New York. While perceptions and expectations for credit access improved, the expected credit delinquency rates rose again and hit the highest level in more than four years. According to the survey, the average expected probability of missing a debt payment over the next three months rose for a fourth straight month to 14.2%, up from 13.6% in August, suggesting some Americans are concerned with their ability to manage their borrowing.
Despite inflation easing, consumers perceive that the costs of everyday items are on the rise. According to the latest report from PYMNTS Intelligence, which tracks the percent of consumers living paycheck-to-paycheck, 70% of all consumers surveyed said their income has not kept up with inflation. This feeling is stronger for paycheck-to-paycheck consumers, with 77% of those struggling to pay bills on time reporting that their income hasn’t kept up with rising costs. Even for those not living paycheck to paycheck, 61% shared this concerning sentiment. As a result, consumers are buying cheaper or lesser quality alternatives, if they’re buying at all.
Prior to the September interest rate cuts, the Conference Board’s Consumer Confidence Index showed consumer confidence plunging to the most pessimistic economic outlook since 2021, based on a weaker job market and a high cost of living. Americans reported being anxious ahead of the upcoming election and assessments of current and future business conditions and labor market conditions turned negative.
However, following the Fed’s rate cut announcement, another report from the University of Michigan’s sentiment index showed a rise in late September, reaching a five-month high on more optimism about the economy. Consumer expectations for price increases dropped simultaneously with more expectations for declining borrowing costs in the coming year. Consumer sentiments on their finances directly impact their spending and payment behaviors, so understanding where they stand can inform a better debt collection approach.
What Does This Mean for Debt Collection?
You’ve heard of Christmas in July, but Christmas in September? With the holiday shopping season starting earlier and in the midst of a high-stakes election, consumers will continue to prioritize expenses and spending based on their current financial outlook, which hasn’t yet caught up with the optimism showing up in the overall economy. The unknowns of what happens post-election along with the delayed impact of lower interest rates and inflation on spending leave the outcome for consumer finances uncertain. Delinquencies continue to persist and it may be some time before the benefits of a friendlier economy show up in consumers’ bank accounts. For companies looking to recover delinquent funds now, understanding how, when and in what way to engage consumers can increase recovery success. For lenders and collectors, here are some things to consider for 2025 planning:
• Self-serve = more repayment. For both businesses and consumers, reducing the need to engage directly with human agents to make payments or access account information saves time and resources. Solutions like self-serve portals represent a shift towards greater consumer control over their financial health, providing an efficient way for individuals to address and manage their finances—and debts specifically—on their own terms.
• Omnichannel or bust. If your business relies solely on one channel for customer communications, it’s time to evolve. Utilizing a combination of calling, emailing, text messaging and even self-serve online portals is the preferred experience for 9 out of 10 customers. And it’s not just beneficial for consumers–the omnichannel approach has been shown to increase payment arrangements by as much as 40%!
• Keep an eye on compliance (or make sure your debt collector does). The regulatory landscape will continue to change, especially post-election. Your risk and success hinges on how well you can keep up with the changes, so having someone responsible for monitoring and tweaking your strategy is critical.
After months of inflation woes, both economists and consumers are starting to see a glimpse of optimism.In the first interest rate cut since the early days of the Covid pandemic, the Federal Reserve announced in September 2024 that it is slicing half a percentage point off benchmark rates. So it’s not surprising that Americans are getting more confident that inflation is cooling off, but optimism for the U.S. economy doesn’t extend to personal finances—consumer expectations for going delinquent on their debt in the next three months hit their highest level since the start of the pandemic.
And the share of severely delinquent credit card debt rose to 10.7% during the first quarter of 2024, according to the Federal Reserve Bank of New York, compared to just 8.2% of credit card debt more than 90 days overdue in 2023.
But better customer engagement strategies can help businesses recover more debt—and self-serve portals are an empowering way to get consumers back on track.
What is a “self-serve portal” in financial services and collections?
In the financial services sector, a self-service or self-serve portal is a secure online platform or application designed to empower consumers to make payments and, ideally, allow them to manage their accounts and payment terms independently (although not all portals offer the same functionality). Self-serve portals aim to grant customers the ability to manage their finances without the help of a service representative.
For both businesses and consumers, reducing the need to engage directly with human agents to make payments or access account information saves time and resources. Overall, these self-service solutions represent a shift towards greater consumer control over their financial health, providing an efficient way for individuals to address and manage their finances—and debts specifically—on their own terms.
What are the benefits of offering self-service options in debt collection?
Similar to any other financial institution or ecommerce business, self-service portals in collections intend to foster a sense of autonomy for the delinquent consumer to manage their debt without the pressure or inconvenience of interacting with a call center agent. Besides creating a more preferred experience for the consumer, organizations needing to recoup funds will reap several benefits by providing self-serve options as well:
Scalability: Unlike human agents who can physically only make a certain number of calls per day and are legally only allowed to call consumers during convenient hours (as defined by Regulation F), self-serve portals are available to consumers 24/7. These platforms can handle any number of collection cases at any time of day without compromising user experience, making it easy to scale your capacity as delinquency volumes rise—no additional headcount required.
Compliance: Non-compliance can be costly in the collection landscape heavily regulated by the Consumer Financial Protection Bureau (CFPB). Whether partnering with a third party or training FTEs, the risk of human error resulting in compliance violations is easily mitigated with digital self-serve solutions that have compliance controls built in—but this does require due diligence on the business or lenders’ part to ask and verify that the solution is keeping up with all necessary regulation and industry security standards.
Frictionless Consumer Experience: Surveys have found that consumers both prefer and want more self-serve options to repay, but that is just the tip of the iceberg of what consumer preferences can mean for your recovery and resolution rates. Research from McKinsey found consumers who digitally self-serve (versus consumers who pay via a collection call):
Resolve their debts at higher rates
Significantly more likely to pay in full
Report higher levels of customer satisfaction
Proven Success with TrueAccord’s Self-Serve Portal
While many financial service institutions already offer basic payment portals, these are often limited when it comes to collecting on delinquent accounts. And traditional call centers typically cannot provide self-serve options, even if they can offer other digital options like email or SMS for consumer outreach.
But TrueAccord provides more than a simple payment portal—the power of our self-serve solutions gives your business and your consumers better control over the repayment process for better results.
TrueAccord delivers less friction and frustration for delinquent consumers ready to manage their debt, while your organization determines the extent of account details to display, what flexible payment options you’d like to provide, and more.
In fact, 98% of delinquent consumers serviced by TrueAccord resolve their debt without any human interaction, with 29% of online payments made outside of traditional FDCPA hours—saving time, resources, and headcount while meeting consumer preferences compliantly under Reg F’s inconvenient time rule and beyond.
Ready to see a demo in action and learn more about all of TrueAccord’s omnichannel, machine-learning powered collections? Schedule a consultation today»»
TrueAccord is a machine-learning and Al-driven 3rd-party debt collection company that is reinventing debt collection. We make debt collection empathetic and customer-focused and deliver a great user experience.
Our digital-first approach to debt collection creates a cycle of collections growth:
1. Improve the perception of the industry
2. Provide a personalized experience
3. Build brand equity and collect
