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.
Keeping up with compliance in the debt collection industry can be a challenge—especially as artificial intelligence, machine learning, and other advanced technologies sweep through both the business and consumer sectors. In a webinar on January 29, 2025, industry experts Kelly Knepper-Stevens, TrueML Chief Legal Officer; Katie Neill, TrueAccord General Counsel and Chief Compliance Officer; and Lauren Valenzuela, Retain by TrueML Products General Counsel and Chief Compliance Officer, shared insights from 2024 and influences on 2025.
Let’s take a look at the takeaways from the webinar:
Compliance & Regulatory News in 2024
One significant trend coming out of the regulations and consent orders in 2024 was focused around companies’ failure to deliver a positive experience for consumers, with federal and state regulatory action against companies who fail to properly manage complaints and disputes. The White House, Consumer Financial Protection Bureau (CFPB), and Federal Trade Commission (FTC) all shared concerns that poor customer experiences may rise to the level of illegality.
October 2024 saw the opening of the CFPB’s nonbank registry, aiming to create a single database of any nonbank entity that’s received a consent order by requiring these entities to register when they have become subject to certain final public orders imposing obligations on them based on alleged violations of specified consumer-protection laws.
The Department of Justice (DOJ) revised their Evaluation of Corporate Compliance Programs to include new areas of focus like technology risk, merger and acquisition integration, and additional questions related to autonomy and resource allocation and anti-retaliation programs. It places significant emphasis on the need for companies to implement structured processes to assess and manage risks tied to AI and other emerging technologies. These updates underscore the need for organizations and individuals subject to compliance measures to have a competency level when it comes to artificial intelligence and all of the various tools and solutions that may be used or inadvertently used through vendors.
Additionally, last year email service providers began to roll out their own requirements, like Google’s one-click unsubscribe in June 2024, which may negatively impact email sender reputation if not adhered to. While this is not the law, not following this requirement can lead to business emails missing the inbox and landing in spam instead—a major risk for deliverability and consumer engagement.
Another digital channel got an update to best practices beyond direct Fair Debt Collection Practices Act (FDCPA) or Regulation F guidelines as well: the Federal Communications Commission (FCC) published an order in February 2024 requiring companies using an automatic telephone dialing system (ATDS) for text messages to honor opt-outs within 10 business days of receipt. Currently the FDCPA doesn’t outline any type of processing time to opt-outs, but the FCC order does provide a new standard for industry best practices.
What Do These Compliance & Regulatory Updates Mean for 2025?
A key takeaway from all the many updates and introductions in 2024 is that not only should organizations make sure they are compliant with the law, but also look at the quality of the consumer’s experience as companies evaluate their compliance programs.
And while last year saw different governing bodies and providers make a lot of progress handing down guidelines and best practices for better consumer experience overall, our experts expect the next wave of successful new regulations to come from the states versus the federal legislation.
That said, a particular proposal from 2021 has been reintroduced on the federal level, but is not expected to pass out of the House Financial Services Committee—which is a good thing for consumers and collectors alike when it comes to digital communications. Rep. Maxine Waters’ proposed debt collection legislation covers many articles, but the concerning portion focuses on introducing a nationwide prohibition from debt collectors reaching out to consumers by email and text message without the consumer’s consent first, which is ultimately a ban on those channels because it’s difficult to get a consumer on the phone to get them to opt in to those channels or to get them to respond to a letter. While it is not expected to pass, it is a prime example of the misunderstandings around these technologies and emphasizes the need to educate and advocate for digital adoption because consumers largely prefer these sorts of methods.
Overall, businesses and collectors need to strike a balance in 2025 between maintaining compliance while also keeping up with consumers’ more digital preferences despite regulations and legislation not always being 100% clear on what is and is not acceptable for compliance.
With that, one of the biggest opportunities and challenges for organizations and collectors in 2025 will be how to vet, adopt, and ensure compliance with exciting emerging technologies.
Emerging Technologies: Benefits, Risks, and Looking Ahead at 2025
Think about ways that you can use technology to help you work smarter, better, faster, but also where pitfalls might be with that technology—this is the mantra moving forward.
With technology getting smarter, especially for the digital communication landscape, it’s significantly less expensive to send emails and SMS than it is to mail letters or place phone calls. It’s safe to say that if your organization is already utilizing digital channels, you will probably send more communications through those channels in 2025, which could expose some of the greater compliance risks in the new year without the right compliance programs and strategies in place.
While consumer preferences consistently lean more towards digital, not all digital engagement is created equal—and poor consumer experience can be the result of poorly designed, implemented, or maintained digital outreach. And as noted above, a significant focus for staying compliant in 2025 hinges on consumer experience. In 2024, the CFPB identified one of their concerns over utilizing technology like AI is a lack of oversight, or even understanding of how to properly use it in consumer communications.
There hasn’t been any federal laws yet regarding the AI in debt collection, but federal agencies have put out significant guidance on using these advanced technologies and what sort of protections businesses need to have in place over them. The Department of Treasury is very interested in how organizations are using the AI technologies with several large sessions bringing in industry members and government regulators to talk about the risks and the benefits and what sort of controls would be best to put in place.
While legislation and explicit regulations may still be in the works on a federal level, businesses should start to prepare now to find both higher chances for success and compliance in 2025.
In a webinar poll, we found that when asked “Do you allow your employees to use LLMs like ChatGPT or Deep Seek?” attendees responded that 70% said a flat no, followed by 17% saying a straight yes, 3% unknown, and only 10% yes after they are vetted by info-sec and legal teams—we expect that 10% to grow exponentially further into the year as AI technologies become not only more prevalent and more accessible, but also more scrutinized on a business-level.
One key directive any business should take away: start writing policies and procedures about this, including putting these sorts of things into your risk assessment annually, at least to be assessing whether or not this is bringing more risk than you want to your organizations.
While using these emerging technologies does open organizations up to a new set of risks—both in compliance and overall consumer experience—using digital avenues for outbound communications can similarly be used for how your business manages compliance oversight of your processes. If you’re leveraging an omnichannel engagement strategy, it can be default to view each channel in isolation, but there are compliance solutions that help map out and monitor your outreach across channels. It is crucial for the positive consumer experience—and in turn, compliance—to make sure consumers aren’t getting stuck anywhere in your engagement process, to make sure your responses to your outbound digital communications are being scanned for different keywords and phraseology, just to name a few of the modern compliance elements.
Can Your Business Future-Proof Its Compliance Program?
As we saw in 2024, compliance and best practices can change rapidly but can also lag behind emerging technologies. Some of the best ways to future-proof your compliance strategy is to pull insights from the recent past, and 2025 has plenty to draw from.
But one way to take some of the pressure off internal teams trying to keep up with compliance is by partnering with industry experts with a proven track record of being ahead of the curve—and in TrueAccord’s case, even helping influence them. Our perspective since our company’s inception in 2013 has been that legal compliance is at the forefront of understanding the future of the collections industry and what it means to prioritize consumers.
TrueAccord is a licensed, bonded, and insured collection agency in all jurisdictions where we collect. Our legal team follows developments in regulations and case law to develop policies and procedures according to their constant changes. We ensure complete compliance control, auditability and real-time updates for changing rules and regulations. Our digital collections process is controlled by code, ensuring that all regulatory requirements are met, while still being flexible to quickly adjust to new rules and case law.
With consumer preferences leaning more and more towards digital communications, it can be easy to consider call centers for debt collection as a thing of the past. In fact, the first prediction of call center demise came in the year 2000 “Death of the Call Center”—but don’t completely cross off calling to recoup delinquent funds.
Phone calls serve a valuable purpose in a fully omnichannel approach, in more ways than you may think…
The Differences Between Outbound vs Inbound Calling—And Why Both Are Crucial in Debt Collection
If your call center agents are only dialing out to reach delinquent consumers, you are missing out on opportunities to answer the phone for consumers ready to talk. Known as outbound vs inbound calling, both functions are vital components to a comprehensive omnichannel strategy.
So what’s the difference between outbound vs inbound calling?
OUTBOUND: Call center agents dial out directly to consumers
INBOUND: Call center agents answer incoming calls made by consumers
Whether agents are dialing out or answering the phones, calling has been a cornerstone of debt collection communications for decades, and its primary objective remains the same: recover owed money, negotiate and resolve issues, and arrange commitment for repayment plans.
Even when consumers are conducting more and more financial transactions online, phones still have specific use cases businesses can’t afford to ignore when collecting debts.
Use Cases and TrueAccord Success Stories
Calling as part of the debt collection communication mix may be considered the old-school method, but its use cases remain relevant today:
Lack of email or digital contact information
Acquiring consent for digital communications where required
Reaching consumers unresponsive to digital outreach
Follow up on failed or missed payments
And there are important use cases on the flipside of the phone line too. Allowing consumers to initiate contact through inbound calling can create a more accessible and manageable situation for consumers to negotiate repayment plans, particularly for those dealing with complex issues or disputes.
At TrueAccord we are digital-first, but not digital-only. By providing phones as an active channel for engagement, we are able to reach consumers who may otherwise slip through the cracks of digital communication and support a wider range of consumers, empowering them to resolve their financial obligations effectively and recover delinquent funds more efficiently.
“Thank you for working with me. TrueAccord is an amazing agency. Very flexible—just give them a call.” – Real consumer feedback
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
Email has come a long way from the mass blast messaging—developing, customizing, and optimizing intelligent email strategies has shown success in both engagement and repayment rates in debt collection. But there’s more that goes into harnessing this channel than just hitting send and hoping for the best.
Here’s how creditors and collectors can strategically leverage email in debt collection communications to enhance engagement, maintain compliance, and drive repayments.
Why is Email Critical in Collection Communications?
In today’s increasingly digital world, most businesses are already using email for consumer communications, from marketing to policy updates, so extending that to engaging delinquent accounts is a natural next step. Email is a familiar tool for both senders and recipients, and businesses benefit from this in terms of engagement and repayments:
Contacting first through a consumer’s preferred channel can lead to a more than 10% increase in payments (and over half of consumers state email as their preferred channel)
Digital-first consumers contacted digitally make 12% more payments than those contacted via traditional channels
Beyond engagement effectiveness, email is a cost-effective communication tool, especially compared to traditional methods like physical letters or phone calls. Printing, postage, and call center costs quickly add up, whereas email offers a scalable option for communicating with delinquent accounts.
Moreover, email provides a secure and traceable audit trail. Each email sent can be tracked, and responses are timestamped, offering businesses a transparent record of all communications for compliance and reporting purposes.
Core Components for a Successful Email Program
While adding email into the communication channel mix is critical, it is the set up, execution, and continued optimization of that email program that can actually make a difference when it comes to consumer engagement. There are many elements, but three core components of a successful email strategy are:
Infrastructure: An email program is built on several components—Mail Servers, Mailbox Providers, Internet Service Providers (ISPs), Email service providers (ESPs), and more—and while infrastructure can be complex, the risks a business runs without a sound infrastructure are quite consequential, including having sent emails blocked, deferred or delayed delivery, or winding up lost in the recipient’s spam folder.
Data: Understanding data collected from consumer interactions helps intelligently influence an email strategy in a debt collection program, especially when focusing on email engagement metrics (such as Opens, Clicks, Unsubscribes, and more)—but skipping over these analytics and just using mass blast techniques can result in consumer complaints, hard bounces, falling into spam traps, and ultimately lower repayment rates.
Content: Solid infrastructure and reliable data are essential in any email program, but when it comes to debt collection, content can be the tipping point between a consumer committing to repayment or ignoring the outreach altogether (or even reporting your communications as spam or harassment)—from subject lines to your call-to-action (CTAs), sending the right message to consumers is crucial.
If your email efforts are missing any of the core components, it doesn’t matter if your collection strategy qualifies as omnichannel—your operations are going to be missing recovery opportunities.
But let’s take a look at the use cases and success stories that harness the power of email for better consumer experience and bottom line results.
Use Cases and TrueAccord Success Stories
Surveys show 59.5% of consumers prefer email as their first choice for communication, and even the courts have ruled that email is less intrusive than a phone call for debt collection. This case—Branham v. TrueAccord—is a win for consumers, creditors, collectors, and omnichannel as a communication method.
Considering that, when given the opportunity, more than 29% of consumers resolve their accounts outside of typical business hours (before 8am and after 9pm) when it is presumed inconvenient to contact consumers under the federal Fair Debt Collection Practices Act (FDCPA), relying solely on reaching consumers during a call center’s business hours can result in almost a quarter of consumers not engaging or taking the next steps in their repayment process.
Using a sophisticated omnichannel strategy helps TrueAccord reach consumers at times that are right for the consumer and through the right communication channel, which ultimately creates a non-intrusive consumer experience.
The terms “omnichannel” and “multi-channel” are frequently used to describe consumer outreach strategies, and while they may sound similar, the differences between these approaches are crucial, especially for effective debt collection.
Let’s break down the key differences between omnichannel and multi-channel communications, particularly in the context of debt collection, and why these distinctions matter more than ever.
Missed Opportunities of Multi-channel Communications
Multi-channel communication refers to the use of multiple, separate communication channels to reach a consumer—such as email, text messages, phone calls, letters, or even self-service portals—but each channel operates independently from the others, and there is little to no integration between them.
For example, a consumer may receive an email notification about their outstanding balance, followed by a text message a few days later. These two forms of communication are treated as isolated experiences, with no connection between them. The consumer’s journey is fragmented and valuable insights on the consumer’s behavior is lost for the business.
While the multi-channel goal is to maximize interaction across the various channel touchpoints, it doesn’t enable cohesive consumer insights to influence engagement strategies, leaving better engagement and repayment opportunities on the table.
The Power of Omnichannel Communications
Omnichannel communication, on the other hand, goes a step further by integrating all available channels to create a unified engagement strategy. Whether the debtor is engaging with a text message, phone call, email, or self-service portal, the consumer’s journey flows smoothly across these channels.
If a consumer receives an email notifying them of their debt and soliciting repayment but opts instead to speak with a representative over the phone, the omnichannel approach ensures that the agent is aware of the context of the earlier interactions. The overall experience aims to be personalized and unified for the consumer, while delivering the business a comprehensive view of the consumer’s behavior and need (which can help influence more streamlined outreach with similar consumers in the future).
And omnichannel isn’t just about analytics and insights—studies have shown:
Initiating contact with delinquent consumers through their preferred channels can lead to a more than 10% increase in payments
The omnichannel approach has been shown to increase payment arrangements by as much as 40%
Omnichannel is the Future of Debt Collection—And TrueAccord Leads the Way
What sets omnichannel apart is the technology that underpins it—and TrueAccord stands apart with our patented machine learning engine, HeartBeat. By leveraging sophisticated data and insights from over 35 million consumer engagements accumulated over TrueAccord’s 12 years of service, our omnichannel approach tracks and adapts to evolving consumer behavior in real-time. If a consumer opens an email but doesn’t respond, our system might trigger a follow-up text or phone call at the right moment—tailored to the individual’s preferences and previous interactions.
Our decision engine, HeartBeat, determines the right channel to send the right message at the right time for optimal engagement. We approach consumer communication from an overall reachability perspective to effectively engage more accounts and get more resolution versus simply determining if one channel is better than the other.
While multi-channel strategies can help organizations reach consumers across various touchpoints, the omnichannel approach delivers a truly unified, personalized, and seamless experience that prioritizes the consumer’s journey.
By integrating communication channels and using data to respond to consumer behavior in real-time, TrueAccord can not only increase the effectiveness of their outreach but ultimately lead to higher recovery rates.
In the financial technology sector, there are many services that individual companies, known as fintechs, can specialize in. For one such fintech, their focus was powering money for people and businesses through electronic funds transfer and international money transfers. As the company grew, so did the challenges associated with managing past due accounts—a crucial aspect of maintaining a healthy financial operation.
By relying solely on its internal team to manage debt collections by manually sending emails and making outbound calls, the fintech faced significant challenges as it grew with scalability and performance, especially for later stage delinquencies.
To effectively manage increasing volumes of accounts, the fintech recognized they would need to expand their efforts and broaden their reach—but traditional ways of adding more headcount proved to be an impractical solution given the associated costs and time required to onboard new employees.
But a better solution was just a partnership away with TrueAccord.
This partnership meant the fintech could skip the strain of adding more dedicated team members or building in-house programs and instead leverage TrueAccord’s advanced digital and self-serve collections platform. This solution not only improved liquidation performance but also significantly increased collection recoveries on a month-over-month basis.
By optimizing the fintech’s late-stage debt collection operations, TrueAccord quickly delivered impressive results: the fintech was able to collect nearly $500,000 within the nine months of partnership in 2024.
Get the full coverage of TrueAccord’s solution and the fintech’s impressive results by downloading the free in-depth case study here»»
It’s that time of year again—the season of giving, which has landed nearly half (47%) of consumers in debt thanks to holiday spending in the past. And the struggle continues to be real for consumers with 68% reporting that inflation is stretching their holiday budgets thin and 89% of consumers reporting they feel tempted to spend more than they should.
For businesses, preparing for this almost inevitable holiday hangover should start now before the wave of past-due consumers comes rolling in (and rolling into late-stage delinquency further in the new year).
Let’s look at how 2024’s holiday shopping and consumer spending trends should influence your 2025 debt collection strategy.
Record-Breaking Holiday Consumer Spending
Although there are five fewer shopping days in this year’s holiday calendar, that hasn’t slowed consumer spending: the average US consumer intends to spend $1,063 in nominal terms on holiday-related purchases this year, up 7.9% from $985 in 2023. Online sales for Black Friday alone reached a record $10.8 billion, with roughly $11.3 million spent per minute between 10 a.m. and 2 p.m. for online shopping.
And how are consumers paying for these shopping sprees? Credit cards are a top choice for 59%, with half of those saying they plan to use two or more credit cards, but higher interest rates are curtailing the use of credit cards compared to previous years for 44% of consumers. Buy Now, Play Later (BNPL) options are another popular method to purchase items outside their immediate budget with 67% of parents reporting they are likely to use pay later plans to finance their holiday shopping.
Despite a determination to resist that temptation this year (67% of consumers said it’s more important to save money than to give the best gift), the record numbers in spending and the trends towards credit cards and BNPLs foreshadows how businesses across industries need to brace for the post-holiday uptick in delinquencies.
Why Holiday Spending Trends Affect Businesses Across Industries
Before they even bust out the wrapping paper, 30% of consumers reported being prepared to break their budgets and go into debt due to holiday spending.
While historically, credit card balances will rise significantly in the fourth quarter but then go down again in the first quarter of the new year, more consumers are carrying those heavier balances for longer—six in 10 consumers with credit card debt have had it for at least a year, up 10% from three years ago. And separate surveys found that about a third of consumers entered the shopping season with more than $5,000 in debt and 28% of shoppers who used credit cards have not paid off the presents they purchased last year.
So even if your organization isn’t directly selling holiday gifts, consumers’ ability to stretch their budget to cover all their expenses can be impacted.
How to Adapt Your Collection Strategy Based on Holiday Spending Trends
Acknowledging this record spending and rolling debt, what are the key takeaways to help improve your collection strategy moving into 2025?
Meet consumers where they are with digital-first communication Consumers aren’t just shopping online—surveys find that 72% of respondents prefer to manage all their finances online or through a mobile app, so your outreach to collect on past-due payments should start there too. In fact, 98% of delinquent consumers serviced by TrueAccord resolve their debt without any human interaction thanks to our digital-first approach and self-serve portal.
But take an overall omnichannel approach to consumer engagement While digital may be the growing consumer preference, don’t completely write-off traditional collection methods like phone calls and letters. There are many situations when digital may not be the ideal choice for outreach (such as lack of email contact, acquiring consent for digital communications where required, connecting with consumers unresponsive to digital outreach, among others), and not working with a collection partner that offers the full suite of communication channels means your business is missing out on recouping more.
Be empathetic to consumers (all year round) More than half of consumers reported feeling stressed about their finances during the holiday season and, just like their gift-giving bills, these feelings can roll into the new year. But engaging with delinquent consumers through an empathic approach can encourage them to get back on track better than a generic template soliciting repayment. TrueAccord’s vast content library ensures consumers are getting the right message through the right channel at the right time thanks to our machine learning engine, HeartBeat, driven by data and insights from over 35 million consumer engagements accumulated over TrueAccord’s 12 years of service.
TrueAccord is at the forefront of defending litigation related to digital communications in debt collection and its recent victory in the Southern District of Florida is a resounding victory for digital channels in our industry.
In Quinn-Davis v. TrueAccord, the court grappled with the concept of timing in order to figure out when an email is considered inconvenient under both the Federal Debt Collection Practices Act (FDCPA) and the Florida Debt Collection Practices Act (FCCPA). In this case, TrueAccord sent the email at 8:23pm, which is considered a convenient time by both statutes. The plaintiff’s email service provider delivered the email into plaintiff’s inbox at 10:14pm, and the consumer opened the email the following day at 11:44am. The court found no violation of the FDCPA or the FCCPA and granted summary judgment in TrueAccord’s favor.
The FDCPA and FCCPA Prohibitions on Inconvenient Time
To reach its decision, the Court evaluated the inconvenient time provisions of the two statutes. First, the Court analyzed the FDCPA’s provision, breaking it down into three principles:
The basic prohibition: A debt collector may not “communicate with a consumer” in connection with any debt collection at (i) any unusual time or place, or (ii) a time or place known or which should be known to be inconvenient to the consumer.
The safe harbor: In the absence of the debt collector’s knowledge of circumstances to the contrary, a debt collector shall assume that communicating with a consumer between 8:00 a.m. and 9:00 p.m. (at the consumer’s location) is convenient (and therefore does not trigger liability).
The prior consent exemption: If the “prior consent of the consumer” is given “directly to the debt collector,” then the debt collector can engage in the activity described in #1 above, regardless of the debt collector’s knowledge or assumptions of the consumer’s communication preferences.
–See 15 U.S.C. § 1692c(a)(1).
The Court explained that the FCCPA uses similar language to the FDCPA, quoting the statute:
In collecting consumer debts no person shall: … Communicate with the debtor between the hours of 9 p.m. and 8 a.m. in the debtor’s time zone without the prior consent of the debtor.” Fla. Stat. Ann. § 559.72(17) (emphasis added).
The Court noted that, since this case turned on the interpretation of “communicate with,” it did not have to “parse” the “prior consent” exception language. Applying the facts to these two statutes, the court found no violation of law under either—the first published decision relating to email and inconvenient times.
The Court’s Decision: Email, By Its Silent Nature, Is Never Inconvenient Like Noisy Calls
The decision starts with an eye-catching quote:
“If a tree falls in the forest and no one else is around to hear it, does it make a sound?” This case poses a modern variation of that old chestnut, with a tip-of-the-cap to our elected representatives in Washington, D.C. and Tallahassee…
The court cites its authority under the recent U.S. Supreme Court decision Loper-Bright Enterprises v. Raimondo to reject the CFPB’s interpretation of when an email is considered inconvenient in Regulation F, discussed further below. In its own interpretation, the court found that the consumer opened and read the email at 11:44am, which is a presumably convenient time under both statutes.
The court explicitly stated that it did not take into consideration facts about whether the timing of the email was inconvenient because no evidence was presented on it. However, the court said:
So, what is a prohibited e-mail communication under the FDCPA? When precisely does liability attach? If a debt collector sends an e-mail after 9:00 p.m. and the consumer opens and reads it at 9:00 a.m. the following day, does that violate the FDCPA? What if the debt collector sends an e-mail before 9:00 p.m. but the consumer reads it at midnight? Liable? Clearly, the FDCPA’s safe harbor was aimed at protecting consumers from after-hours noisy telephone rings—not e-mails sitting in one’s e-mail box (silently) overnight. (Emphasis added.)
By this language, the Court suggests that even an email sent after 9:00pm may not be a violation of the inconvenient time prohibition. In this case, the plaintiff opened the email over 13 hours after it was delivered into their inbox, indicating the consumer waited to read it until it was convenient for them.
Ultimately, an email is convenient whenever the consumer opens it because that is when they chose to do so. TrueAccord knows this to be true based on our email communications with millions of consumers. Our own engagement data shows that 25% of consumers engage with emails after 9:00 pm and before 8:00 am. The timing between when an email is sent, delivered, and opened, similar to physical letters, may vary widely from consumer to consumer based on their own choices.
The Court Refused to Follow the CFPB’s Interpretation of the FDCPA
It is important to recognize that in reaching this decision, the Court declined to follow the CFPB’s guidance. In Regulation F, the CFPB spelled out its official interpretation that the time an email is sent, not delivered, is used to determine whether the communication was sent during an inconvenient time. See 12 C.F.R. Part 1006.6(b)(1)(i)(1).
Citing both the Supreme Court Loper decision (and the original, landmark Supreme Court decision in Marbury), the Court stated:
While the CFPB interpretation may have some appeal (on policy grounds), I am neither bound by it nor required to defer to it. See generally Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024) (overruling Chevron USA, Inc. v. Nat’l Res. Defense Council, 467 U.S. 837 (1984)). “It is emphatically the province and duty of the judicial department to say what the law is.” Loper, 144 S.Ct. at 2257 (citing Marbury v. Madison, 1 Cranch 137, 177, 2 L.Ed. 60 (1803)).
Based on the plain language of the FDCPA, the Court independently concluded that a debt collector must “actually transmit or transfer information to another person in order to communicate with a consumer.” Notably, in reaching this conclusion, the Court pointed out what all of us already know because we use email every day, stating:
You don’t need to be a Ph.D. in computer science to take judicial notice of the basic nature of e-mail communication. Hundreds of millions of Americans use e-mail all the time.
This decision does not require debt collectors who set up their email policies and practices based on the CFPB’s Regulation F guidance to change their practices. As the Court noted, sending proactive, debt collection emails during the presumptively convenient hours of 8:00am to 9:00pm may be “more protective of consumers in many cases.” Just like sending physical letters, the time when a consumer chooses to read the email is outside of a debt collector’s control and fully within the control of the consumer. If the consumer chooses to read it late at night or 2 days later at noon, that is the consumer’s choice and their preferred time to read that message. Therefore, it remains a best practice for compliance with the plain language of the FDCPA and similar state laws like the FCCPA, to send proactive, debt collection emails during presumptively convenient times.
— Note: This blog post is for informational purposes only and does not constitute legal advice. It does not create an attorney-client relationship. Readers should consult their own counsel for advice regarding their specific situation.
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.
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
