TrueAccord is no stranger to litigating cases that establish good case law for digital collections, and the recent decision in Robertson v. TrueAccord Corp. is no exception to this. The industry has faced confusion as to whether or not a text message is as intrusive as a phone call to consumers, legally speaking. It’s one of many gray areas the debt collection industry faces. However, to date, few participants have sought to establish legal clarity through court action.
Closing some gaps to this key gray area, the Robertson decision contains several pivotal rules for digital collections, which added TCPA clarity as the cherry on top. The court found that text messages are not as intrusive as phone calls, settled the debate on whether the mailbox rule applies to debt collection emails (hint: it does!), and found that the content of TrueAccord’s text messages necessitates a finding that an automatic telephone dialing system (ATDS) was not used. Ready for more details? Let’s jump in.
Text Messages are Not as Intrusive as Phone Calls
In Branham v. TrueAccord, TrueAccord spearheaded case law finding that email is not as intrusive as a phone call, and now we have a companion case that finds the same is true about text messages. In this case, the plaintiff alleges that TrueAccord’s text messages constituted harassment under the FDCPA, and the court squarely disagreed. Here’s the key reasons why this decision was reached:
First, the court noted that the volume of text messages sent did not rise to the level of harassment. TrueAccord sent 11 text messages in the span of 2 months. Second, the court found that the Opt-Out option in each text message (“Reply STOP to opt out”) was also a strong factor against harassment, as stopping the messages was in the plaintiff’s control. Third, the court equated text messages to emails and found both styles of digital communications are not as intrusive as phone calls.
The Court said:
“This conduct does not approach a level that would allow the Court to infer an intent to harass, especially because text messages, like letters, are easily ignored and far less intrusive than phone calls.”
The mailbox rule is a legal doctrine that states if someone puts a piece of mail into a mailbox, then there is a rebuttable presumption that the piece of mail was delivered to the recipient. This presumption can be rebutted by the recipient by presenting credible evidence that shows otherwise. As recognized in the Robertson decision, courts have been applying the mailbox rule to email since 2013, including the Fifth Circuit in 2021. If a debt collector can prove that it sent an email, then there is a rebuttable presumption that it was received by the consumer.
In the instant case, the plaintiff could not rebut the presumption. The Plaintiff alleged that TrueAccord sent the above-referenced text messages without first providing a validation notice as required by the FDCPA. As evidence, plaintiff provided screenshots of an inbox search plaintiff conducted after the litigation began showing no emails received from TrueAccord.
TrueAccord, on the other hand, provided business records evidencing that it did, prior to sending any text messages to plaintiff, send an email to the email address of the plaintiff containing all validation notice requirements. TrueAccord received no indication of any email bounce backs or other undeliverability notices.
The Court said:
“Even though the statute requires only that the notice be sent, the mailbox rule presumes email [sic] was received…Because Plaintiff has presented evidence only of email searches performed some indeterminate time after this litigation began, she has not rebutted the presumption created by the mailbox rule.”
The Content of a Text Message Can Indicate When an ATDS is Not Used
The industry has seen endless case law over the years narrowing down what, exactly, is and what is not an automatic telephone dialing system (ATDS) under the TCPA. While it’s been generally settled since the U.S. Supreme Court case Facebook v. Duguid that the systems industry members do not qualify as an ATDS, the Robertson decision adds another decision supporting this.
In this decision, the court found that the content of the text messages themselves held the key to determining whether an ATDS was used or not. The fact that TrueAccord’s text messages included certain characteristics that would only be applicable to the plaintiff’s specific account, e.g., the debt amount, necessarily means that the system used was not randomly generating phone numbers. It’s another example of how personalization helps create a better ecosystem for all parties involved in the industry.
The Court said:
“The facts alleged by Plaintiff only plausibly support the inference Defendant did not use an ATDS… Crucially though, Plaintiff alleges the messages contained personalized information (specific debt amounts),making it implausible that Defendant sent them to her using a device that randomlygenerates the phone numbers to be contacted.”
Get More Insight Into Debt Collection Compliance with TrueAccord
This case is a great example of the expertise TrueAccord’s legal team puts into practice. We’re committed to following and moving case law forward that furthers our mission of bringing a consumer-centric approach to debt collection. Our digital collections process is controlled by code and sets the standard for compliance.
Do you want a firsthand look at how TrueAccord could bring personalization at scale for your accounts? Our expert team is ready to help.
There are quite a few sitcom episodes where one of the main characters is competing against technology. Whether it’s selling more paper than a website, or automating IT support, the human element in these shows always prevails. In the debt recovery industry, machine learning algorithms have stepped up to challenge humans for the title of best collector.
At scale, algorithms have many innate advantages for debt collection over human agents. Let’s take a look at how this competition would shake out, the argument for why machine learning algorithms are the best debt collectors and how it stacks up to other technology like chatbots.
The Benefits of Machine Learning and Algorithms for Debt Collections
One of the core reasons why machine learning algorithms can be considered “the best collector” is because they can process large datasets faster and more efficiently than humans. Algorithms can analyze data of past consumer behavior, learn the nuances of individual accounts, and adjust strategies to improve the collection approach over time. By comparison, it would take a team of humans countless hours to reach the same level of analysis and insight, let alone making the required adjustments at scale.
When data is leveraged to offer personalization at scale, every interaction with a consumer is optimized for engagement. For example, an algorithm could send an email to a consumer first. If that person doesn’t respond, the technology could try a new content template, subject line or even try sending a text instead. The speed at which algorithms can process data allows debt collection strategies to evolve to meet consumer preferences with greater accuracy.
Deployment Speed and Compliance Risk Differences
Human collectors take significant time and resources to train. They often have to go through weeks of onboarding and need to shadow more experienced collectors before reaching out to consumers. An algorithm can often be integrated into existing collection strategies faster to make a lasting meaningful impact. Algorithms solely focus on analyzing data and behavior to optimize collections. It’s technology that has no emotional biases or “off” days that happen to every human being.
Machine learning algorithms help enable code-based compliance. It helps ensure that all regulatory requirements for debt collection are being met with the ability to run real-time updates for any new rules and case law. This technology eliminates the “human error” factor in debt collection compliance, which reduces risk for businesses across their recovery strategy.
When a “Human Touch” is Needed in Debt Collection
While machine learning algorithms can automate digital communications and optimize engagement, there are situations where human collectors have an advantage. Consumers with larger debt balances are more likely to prefer a human collector who can work through a more complicated situation with empathy. Even though consumer preferences are shifting more towards digital communications and self-service portals, some consumers will only talk to other people. This fact is part of the reason why it’s important to have an omnichannel collections strategy to help ensure all types of consumer preferences can be honored.
Algorithms vs. Chatbots for Debt Collection
In the debt collection industry, there have been more companies utilizing chatbots in their recovery strategy. The most common application is when a consumer visits the website, an option appears that lets that person talk with a chatbot. However, this form of self-service has some drawbacks that make it less valuable than machine learning algorithms that operate at the heart of the strategy.
If a chatbot is powered by AI, there’s a risk of hallucinations occurring. When discussing debts, inaccurate information from an AI chatbot could lead to an increase in disputes and expose the business to legal risks. The other option is decision tree chatbots that could have trouble resolving more nuanced questions from consumers.
The effectiveness of chatbots for debt collection has one big issue: in most cases, the consumer has to visit a company’s website to engage with it. Once a consumer goes to a collector’s website, they’ve already taken a big step towards engagement. Debt collection is often about finding the most effective ways to get a consumer’s attention and prompt action. Chatbots still require the outreach to drive consumers to a website.
AI Voice is Poised to Become a New Challenger
AI voice technology has made huge strides recently. AI voices have the ability to sound human with different tones, speech inflections and more. Even when the use of an AI voice is disclosed, the realism it can now achieve helps consumers get past some hesitancy of speaking to it. In the future, it’s likely that we’ll see more voice AI integrated into omnichannel collection strategies. While complex cases would be handled by human agents, voice AI could handle the more routine calls. This alone could significantly improve the effectiveness and efficiency of collection strategies.
Get High-Performance Recovery Powered by Machine Learning
TrueAccord has a patented machine learning engine called “Heartbeat” that creates a personalized journey for every consumer. If you’re ready to learn more about why many industry experts believe that an algorithm is the best collector, we’re here to help. Contact us today to explore TrueAccord’s full-lifecycle recovery solutions.
TrueAccord is expanding its industry-leading recovery business to include a dedicated first-party collection service, designed to act as a seamless extension of clients’ brands. With this addition in the early-stage delinquency space, TrueAccord now offers a complete full-lifecycle recovery solution that bridges the gap between initial re-engagement and late-stage recoveries.
This first-party service, powered by TrueAccord’s subsidiary Sentry Credit, Inc., focuses on consumer engagement and retention rather than just liquidation. It utilizes a “HumAIn” approach to collections, supporting seasoned agents with advanced AI to deliver a brand-aware experience that feels like a natural extension of an internal team.
“By expanding our services to address the full recovery lifecycle, we are bridging the gap between early-stage re-engagement and late-stage resolution,” said TrueAccord CEO Mark Ravanesi. “Our approach combines the precision of our machine learning engine with the empathy and experience of our professional collection team. Whether a consumer is just falling past due or is deep in the recovery funnel, they receive a convenient, digital-first experience that prioritizes retention and financial health while delivering the high-performance results our clients expect.”
With a focus on positive consumer interactions and industry-leading recovery, this first-party expansion offers clients a seamless way to deliver their customers a consistent, empathetic experience from the very first delinquency communication. By leveraging the patented AI technology, TrueAccord eliminates guesswork and allows collections experts to focus on helping consumers find a sustainable way forward. The service is built to be both flexible and highly scalable, working directly from clients’ AR systems or its own CRM.
There’s no question that the debt collection industry is in a state of evolution, but one thing that persists, especially with change, is the emergence of myths. As more businesses are turning to a digital collection strategy, misconceptions are naturally going to arise with a new approach that focuses on email, text messages (such as SMS and MMS), and self-service portals.
Let’s take a look at three of the most common digital debt collection myths, the truth behind them and how a digital-first approach to collections helps businesses.
Myth 1: Self-Service Reduces Recovery Rates in Debt Collection
Experts agree that it’s likely this myth was born out of the dominance call-and-collect had over the industry for decades. In fact, many businesses still hold the opinion that direct contact from a staff member is the best way to improve recovery rates. The truth is that self-service portals not only improve recovery rates, but they are also preferred by the majority of consumers.
A 2023 TransUnion data report showed that 60% of consumers prefer self-service options to resolve their debt. Self-service portals give consumers the added convenience of being able to view and manage their debt on their own time. Another study conducted by McKinsey found an increase of 15% for cured accounts after self-service options were implemented.
The beauty of self-service is that it eliminates the “shame factor” many consumers experience when talking to someone directly about their debt. This comes into play when consumers are making decisions on which bills to prioritize. Roughly 14% of bill-payers identified “the ease of making a payment” as a key factor in their decision-making process.
Myth 1 Status: Busted – Self-service options DO NOT reduce recovery rates. Your business could actually improve repayment performance by embracing this digital-first strategy.
Myth 2: Digital Debt Collection Strategies Are Too Expensive
The debt collection industry is leveraging technology more than ever. When businesses see adjectives like “AI-powered”, “automation” or “digital communications”, there’s an assumption that these products and services are expensive. Even when a business is interested in taking a digital-first approach, the process of setting up email, text messages and other channels can seem costly to build from the ground up.
While there’s always a cost to implementing digital debt collection strategies, the more traditional tactics are increasing in cost as well. For example, the cost of sending physical mail continues to increase, and businesses that rely heavily on call-and-collect often need to hire more staff to scale up collection efforts. A McKinsey report found that embracing a digital-first approach can lower the cost of collections by upwards of 15%.
There are also collections platforms powered by machine learning like TrueAccord that use consumer engagement data to predict the next best step, making outreach more efficient. This approach paired with meeting consumers in the digital channels they prefer can improve recovery rates and help offset the cost of collections.
Myth 2 Status: Busted – A digital-first approach to collections has the potential to help businesses recover more. Also, the increased cost to collect and agency fees often associated with traditional strategies aren’t present when the right digital-first approach is used.
Myth 3: Consumers Find Collections Through Digital Channels Untrustworthy
A CNET survey found that a staggering 96% of U.S.consumers receive at least one scam message a week. There’s been a stark rise in financial scams, and many of these messages come through digital channels. This has led more businesses to think that consumers will likely find any collections outreach through digital channels untrustworthy. While this rationale makes sense, the truth is that many consumers prefer digital communications.
Digital communication channels are key to omnichannel strategies that put consumers first. An omnichannel collections strategy means using multiple, often complementary channels to contact consumers in their preferred way. One of the key channels is email, which has gone from a “nice to have” for debt collection outreach to a necessity. In fact, surveys show that roughly 59.5% of consumers prefer to be contacted through email first. And when a business reaches out to a consumer through their preferred channel, it can lead to a more than 10% increase in payments.
While more consumers are turned off to direct phone calls, businesses can still get attention on their device. Around 65% of consumers want their billing, payment and account information sent to them through text. A major reason consumers are gravitating more towards digital channels is because it empowers them to address the debt at their own pace
Myth 3 Status: Busted – Even though financial scams have made consumers more careful with digital communications, their preferences for those channels still hold strong. By honoring those preferences, debt collection strategies can reach higher performance while improving customer satisfaction.
See How a Digital-First Approach to Collections Could help Your Business
Even though we covered three of the most common digital debt collection myths, there are plenty more to navigate. By knowing the full capabilities of digital channels, your business can improve its collections strategy. The good news is that you don’t have to figure this out alone.
TrueAccord is an industry leading debt collection agency that’s powered by patented machine learning to deliver a consumer friendly experience and improve collection results. Connect with our team today to unlock the potential of a digital-first approach.
The cost of living continues to weigh on American consumers. While eggs are no longer the focus of food price pains, other household staples like coffee, beef, and candy have seen double-digit price increases over the past year. Grocery prices rose at the fastest pace in 3 years in December, and when combined with rising costs of other essentials, it’s concerning but not entirely surprising that consumers have turned to crowdfunding to cover basic needs.
According to Bank of America economists, “The ‘K’ is here to stay”, referring to the duality seen between financial stability and spending of higher- and lower-income households. The top 5% of consumers drove the bulk of overall spending gains through late 2025, while lower-earners cut back on nonessential purchases amidst financial pressures. For those on the middle to lower end of the income spectrum, an unfavorable economic climate will put more strain on finances, leading to increased delinquency and the need for alternative sources of credit to make ends meet.
With new and persisting economic challenges and no indication of reprieve in sight, the year ahead coming out of 2025 looks challenging for consumers, especially those on the middle- to lower-end of the income spectrum. We’ve distilled the factors of the economic landscape and crafted recommendations to help borrowers, lenders, and collectors prepare accordingly.
Key Economic Indicators
The economic data from Q4 shows the financial hurdles facing many households. While the economy as a whole continues to move forward and looks strong on paper, the benefits are not being shared equally, and the real picture is complex below the surface, creating significant headwinds for a large portion of the population.
The job market has cooled significantly since earlier in the year, with employers adding only 50,000 jobs in December, and the unemployment rate settled at 4.4%. Long-term unemployment rose by nearly 400,000 people over the course of 2025.
Inflation still remains a primary concern. December data showed a 0.3% monthly increase in the CPI, with the annual rate holding at 2.7%. Essential costs continue to climb, especially shelter (up 3.2% annually) and food (up 2.4% annually).
In response to the cooling labor market, the Federal Open Market Committee lowered interest rates by 0.25% at its December meeting, landing at a target range of 3.50%–3.75%. This marked the third consecutive cut of the year, but expectations for multiple rate cuts, if any, in 2026 have dropped.
Household balance sheets are showing significant stress, with delinquency expectations having deteriorated to their highest levels since the pandemic. Notably, auto delinquencies reached 3.88% late in the year, the highest level in 15 years, and that’s not counting closed, charged off accounts. Foreclosure filings in December 2025 were up by 26% over November, having surged by 57% compared to the previous year.
Credit card delinquency gradually rose through the second half of 2025, both in terms of account volume and dollar balances, with 30-plus-day delinquency rates running higher than pre-pandemic levels. News early in 2026 about caps to interest rates has banks on edge, with potential implications for credit access at a time when consumers may need it most.
What’s Impacting Consumer Finances?
While higher earners are still faring well, lower-income Americans are struggling with wage stagnation that has not kept pace with the costs of living. Several specific factors are squeezing household budgets and making it harder for consumers to manage their financial obligations.
Grocery prices rose by 0.7% in December, the largest monthly gain since the peak inflation period in August 2022, and were up 2.4% over the previous year. Restaurants similarly felt this squeeze, and passed increases on to consumers, with costs for dining out rising by a similar amount, marking the largest monthly gain in three years.
Utility prices are similarly starting to strain budgets, with electricity prices up almost 7% last year and natural gas reporting double-digit increases. This cost is expected to continue rising as data centers that provide the computing capacity and storage needed to power AI models add to power demands. Electricity costs near significant data center activity have increased as much as 267% per month, and as more data centers are constructed, more Americans should expect equivalent cost increases.
The federal student loan landscape is undergoing a major shift with big implications. The SAVE plan was shut down in late 2025 following a legal settlement, forcing millions of borrowers to transition to alternative, often more expensive, repayment plans. A combined 12 million borrowers are in various stages of delinquency, default or forbearance with uncertain offramps, and the Education Department announced plans to resume wage garnishment in early 2026.
Health care costs are also going to be a big factor in budgets this year. Industry experts expect the premiums for employer-sponsored insurance have increased faster than overall inflation in 2025 and will likely do so again in 2026. Policies available on Affordable Care Act (ACA) exchanges are rising while tax subsidies for ACA coverage are expiring, which will raise rates for the 24 million people currently covered by ACA policies. For Medicaid recipients, new eligibility requirements under the One Big Beautiful Bill Act will also raise health care costs or reduce availability altogether.
What’s Impacting the Debt Collection Industry?
The debt collection industry is adapting to a regulatory environment that is becoming more localized and a technological landscape that demands greater attention to security.
The future of the CFPB is in flux as funding disputes continue. As of the time of this publication, Acting Director Russell Vought has asked the Federal Reserve for $145 million to fund the agency from January through March. He had previously moved to dissolve the CFPB, instructing staff to cease work and halting the agency’s funding. In the meantime, the agency is aggressively pursuing a deregulatory agenda.
As federal oversight wavers, states are stepping in. At least 14 states proposed legislation in 2025 to regulate financial products, with many laws taking effect late in 2025 or on January 1, 2026. For a quick summary of the key developments from 2025, take a look at this overview from TrueML’s legal team.
The push toward AI in financial services continues, but the PwC 2026 Global Digital Trust Insights report highlights that 47% of leaders cite a lack of qualified personnel as a top challenge. An undisputed point is that implementing AI must be paired with robust data protection to maintain “digital trust”, which is a concern for regulators, businesses, and consumers alike.
How Are Consumers Feeling About Their Financial Outlook?
Consumer sentiment reflects the deep anxieties revealed in the economic data. The Conference Board’s Consumer Confidence Index declined to 89.1 in December, with consumers’ assessment of their family financial situations turning negative for the first time in four years.
The University of Michigan Consumer Sentiment Index showed a slight rebound to 54.0 in early January, but this remains nearly 25% lower than the previous year. Furthermore, 47% of Americans believe they would not be able to find a good job in the current market.
The Federal Reserve Bank of New York’s December 2025 Survey of Consumer Expectations agreed, with job finding expectations declining to a series low and job loss expectations also worsening. While spending and household income growth expectations remained mostly unchanged, delinquency expectations deteriorated to the highest level since the onset of the pandemic, and inflation expectations increased at the short-term outlook.
What Does This Mean for Debt Collection?
For businesses with financially stressed customers, navigating this challenging environment requires a strategy centered on empathy, awareness, and trust. Leveraging AI to do this at scale offers a path to success, but will require cautious, data-driven strategies and strengthened governance to navigate evolving risks and opportunities. Here are a few things to consider:
Consumer expectations have evolved, your strategy must adapt. Empathy, convenience, and a customized experience will go a long way in building goodwill with consumers in debt. If you’re still relying on calling alone to drive repayments, your collection results will likely show the impact of being behind-the-times this year.
AI is everywhere, but how you use it is key. Whether you’re using LLMs to write emails, chatbots to field consumer inquiries, or deeper, systemic AI, you’re going to need to keep an eye on evolving regulations, auditability, and data security concerns. For example, are you prepared for consumers using agentic AI for debt collection negotiations?
And keep the other eye on the rapidly evolving regulatory landscape. What happens next with the CFPB will have big impacts on businesses and consumers. But either way, states and the FTC are stepping in with their own priorities for both financial services and AI regulation. Strategies will need to be informed and agile to keep up.
You might have heard of Rocket Money before. It’s a subscription finance app for consumers that helps with budgeting and tracking spending. One of its core features is negotiating with companies on a user’s behalf to lower the monthly bills of streaming platforms, cell service and more. In many cases, this process uses agentic AI for the negotiation process – a tactic that consumers could adopt for themselves.
Consumers are already using AI to help make financial decisions. LLM tools like ChatGPT will create a budget, and AI can be used to call stores to check stock and even make purchases. And with GenAI tools being widely available and incorporated into day-to-day tasks, consumers are even using AI to draft emails, scripts and texts to use in debt collection negotiation.
The industry will see more consumers using the technology more heavily on their end as well. In this blog we’re going to explore the emerging frontier of consumers using AI for debt settlement.
Consumers Could Use Agentic AI to Call Debt Collectors in the Near Future
As AI becomes more widely accepted and used, consumers will likely start using AI agents to interact with debt collectors to try and resolve a debt. If consumers start using agentic AI to negotiate debts, there’s logistical and legal challenges that will arise.
For example, if the AI agent does not identify itself as an AI (which is NOT considered to be current best practice for businesses), questions will arise around who the collector is speaking to and what authority they have.
Even if these AI agents have identifying information for the consumer, such as SSN, phone number and DOB, debt collectors will need to find ways to ensure that the AI is actually acting for the consumer and that it is not a bad actor.
If a debt collector gets a call like this, it may be a scam. Industry experts say that if AI agents for consumers are regularly used, there has to be a dedicated verification step. This could mean the consumer getting on the phone to confirm their identity, or implementing some type of two-step verification system. Currently, the idea of an AI agent claiming to represent a consumer raises too many core issues for collectors.
How Should Debt Collectors Treat Consumer AI Agents?
There’s a debate currently going on within the industry on how consumer AI agents should be treated if the trend develops. One view is that the AI should be seen as an extension of the consumer, just like a business’s use of AI is considered an extension of the business. Another is that the AI agent could be considered a third party, meaning the debt collector might not be allowed to share details of the debt.
As the use of consumer AI agents grows, debt collectors will need to work out internal processes for how to manage these calls. Eric Nevels, Sr. Director of Operations Support at TrueAccord, says that until a legal precedent is set, businesses will need to create policies on whether to treat undeclared AI agents as the consumer or as a third party.
The Most Popular Consumer AI Debt Collection Negotiation Tactics Used Today
AI agents are still a ways out from mass adoption by consumers. Most consumers using AI to help with debt collection negotiations do so by asking LLMs like ChatGPT, Claude and Gemini for guidance on financial matters or to generate scripts to use when calling collectors to negotiate a debt. Many people don’t feel comfortable negotiating, and LLMs give consumers confidence by arming them with information and making them feel like they have an expert on their side.
The same approach is being used with collection emails and texts as well. Consumers can easily plug in digital debt collection messages into AI platforms to help decide the best way to respond. This makes the messaging of a debt collector’s emails and texts more important. For example, an email that uses aggressive language is more likely to cause an LLM to advise a consumer to dispute a debt. On the other hand, an empathetic message offering options could prompt AI platforms to encourage the consumer to work with that collector.
Businesses need to be aware that consumers now have the ability to analyze large amounts of their own financial data to help inform what payments should be made to collectors. LLMs have already reached mass adoption by consumers and are much easier to use than a more complex agentic AI. Consumers can now plug in all their debts into AI platforms to get a recommendation on what to pay down first. It’s one of the reasons why businesses need to gain a deeper understanding of AI use in debt collection.
Ready to Boost Your Collection Efforts with Industry Leading AI?
With more consumers using AI for debt settlement and negotiation, your business needs to provide a digital-friendly experience. TrueAccord uses Heartbeat, a patented machine learning engine that uses dynamic feedback combined with millions of customer interactions to figure out the best way to engage each consumer for better payment results.
It’s a personalized, self-service experience that honors consumer preferences while driving more engagement. Contact us today to learn more about how TrueAccord uses AI to collect more from happier consumers.
As we close the third quarter of 2025, the economic picture is becoming one of sharp contrasts. While some top-line indicators may appear stable, a closer look reveals a widening gap between high- and low-income Americans. The post-pandemic boom that briefly lifted lower-income workers has faded, leaving many families facing stagnant wages and rising costs for essentials. This growing financial strain is reflected in rising delinquencies and increasing consumer anxiety about the future.
For the debt collection industry, this moment demands a nuanced approach. The landscape is being reshaped by a complex interplay of economic pressures, a shifting regulatory environment and evolving consumer expectations around technology and security. As we look toward the final months of this year, understanding these dynamics is crucial for protecting your bottom line while treating consumers with the empathy they need.
Key Economic Indicators
The economic data from Q3 shows the financial hurdles for many households. While the economy as a whole continues to move forward, the benefits are not being shared equally, creating significant headwinds for a large portion of the population. A prolonged government shutdown at the beginning of October has impacted the release of key economic data, shifting the focus to alternative sources and making it difficult to get an accurate reading of the situation.
The labor market is showing signs of stagnation and growing inequality. Amid the federal data blackout, experts have been watching nongovernment numbers from sources including Bank of America, Goldman Sachs and ADP, which are all telling the same story about fewer companies hiring in a job market that has cooled since the spring. August data revealed that low-income earners experienced their worst month for wage growth since 2016, while high-income earners saw their best since 2021. Meanwhile, jobless claims are ticking up, with estimates showing a rise to 235,000 in the last week of September.
Inflation remains the primary concern for American families, with September showing a 0.3% increase in the CPI, up to 3%. Core CPI, which excludes volatile food and energy, gained 0.2%. The index for gasoline rose 4.1% in September while energy rose 1.5%. Other indexes that increased over the month include food, shelter, airline fares, recreation, household furnishings and operations, and apparel.
Forty-five percent of U.S. adults cite the rising cost of living as the most important economic issue they face, more than 30 points ahead of any other issue. This is compounded by costs of essentials like electricity, with prices climbing faster than the overall inflation rate. In response to these persistent pressures and concern with the state of the labor market, the Federal Open Market Committee lowered interest rates by .25% at its September meeting, landing at 4-4.25%. Two more rate cuts are widely expected before the end of 2025.
Household balance sheets are also showing significant signs of stress. Credit scores are dropping rapidly for many consumers as they fall behind on payments, with delinquency rates across multiple types of loans reaching heights not seen since the 2009 financial crisis.
Auto loans are a particular area of concern, as surging car prices have pushed more buyers to take out longer loans, some extending to seven years. This has led to a spike in auto loan delinquencies, especially among lower-income consumers. Beyond auto debt, the number of homeowners facing foreclosure is also rising fast, with August foreclosure filings having risen six straight months year-over-year, up 18% from the same period in 2024.
What’s Impacting Consumer Finances?
Several specific factors are squeezing household budgets and making it harder for consumers to manage their financial obligations. First, the U.S. economy is increasingly divided. Higher earners are benefiting from strong investment portfolios and valuable homes, driving a larger share of consumer spending. At the same time, poorer Americans are dealing with flatlining wages, rising unemployment and punishing housing costs. For those in the middle, Q3 was a turning point in the economic outlook. Wages haven’t kept up with the cost of living and the softening job market has many on edge. Running out of savings to cover lingering high-rate credit card balances and auto loans, combined with renewed student loan payments, this cohort is more at risk than ever of falling behind and becoming more vulnerable to financial shocks.
Second, the resumption of student loan payments continues to ripple through the economy. With interest-free periods over, millions of borrowers are now facing renewed financial pressure, adding another significant monthly payment to budgets already strained by inflation. In what is good news for some, the Trump administration has agreed to resume student loan forgiveness for an estimated 2.5 million borrowers who are enrolled in certain federal repayment plans.
Third, as financial lives move increasingly online, consumers are growing more concerned about the safety of their data. A recent survey from Mastercard found that many people now believe it is harder to secure their digital assets than their physical ones. The report found that 78% of Americans are more concerned about cybersecurity than they were two years ago. This anxiety can create friction and mistrust, impacting how consumers engage with digital financial services, including online payment portals.
What’s Impacting the Debt Collection Industry?
The debt collection industry is adapting to a regulatory environment that is becoming more localized and a technological landscape that demands greater attention to security.
Despite the CFPB recently releasing a semi-annual rulemaking agenda, Russel Vought, the Director of Office Management & Budget and the acting director of the CFPB announced that the bureau is going to close in two to three months. However, such a closure would require an act of Congress, as the CFPB was established by statute under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Without congressional action, the agency cannot simply be dissolved by executive order or administrative decision. Vought’s statement therefore appears to reflect a political stance or intention to restructure or defund the agency, rather than an imminent legal reality. Nonetheless, the comment has sparked concern within financial sectors—including debt collection—about potential regulatory upheaval and uncertainty in the months ahead.
Despite the slowdown of CFPB oversight, the Federal Trade Commission (FTC) remains focused on consumer harm and continues its crackdown on illegal collection practices, serving as a reminder that deceptive or harassing methods carry severe consequences. Adherence to both the letter and spirit of the law is paramount.
The push toward AI and digital communication continues to accelerate, especially in financial services. However, with rising consumer anxiety around cybersecurity, the implementation of these tools must be paired with a clear commitment to data protection. Building and maintaining digital trust is no longer just a best practice, it’s a business imperative. Navigating the emerging state-level laws and regulations around AI will become more important than ever.
How Are Consumers Feeling About Their Financial Outlook?
Consumer sentiment reflects the deep anxieties revealed in the economic data. Confidence is low, and worries about jobs and inflation are persistent. The Federal Reserve Bank of New York’s Center for Microeconomic Data’s September Survey of Consumer Expectations, showed that households’ inflation expectations increased at the short- and longer-term horizons. Labor market expectations continued to deteriorate, with consumers reporting lower expected earnings growth, greater likelihoods of losing jobs and a higher likelihood of a rise in overall unemployment.
The Conference Board’s Consumer Confidence Index declined by 3.6 points in September to 94.2. The Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions, decreased by 1.3 points to 73.4. The present situation component, based on consumers’ assessment of current business and labor market conditions, registered its largest drop in a year, falling by 7 points to 125.4. Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low.
The University of Michigan’s consumer sentiment index showed little change in October, down only 1.5 points from September. Decreases in sentiment among older consumers were offset by increases among younger ones. Overall, consumers don’t see much change in economic circumstances and inflation and high prices remain at the forefront of consumers’ concerns.
Other polls confirm this widespread unease, with pessimism about income prospects, combined with high inflation, that has left consumers feeling financially insecure. An Associated Press poll found that high prices for groceries, housing and health care persist as a fear for many households, while rising electricity bills and the cost of gas at the pump are also sources of anxiety. Additionally, 47% of Americans believe they would not be able to find a good job in the current market.
What Does This Mean for Debt Collection?
Navigating this challenging environment requires a strategy centered on empathy, awareness and trust. The economic pressures on consumers are real and significant, and successful engagement in debt collection depends on acknowledging their reality. Here are some tactics to consider:
Lead with Flexible Solutions: With so many households struggling, a one-size-fits-all approach is doomed to fail. Consumers need options, understanding and convenience. Offering self-service portals and flexible payment arrangements is critical. This empowers consumers to manage their debt on their own terms and demonstrates that you understand their financial situation.
Navigate the New Regulatory Patchwork: Compliance is no longer just about following federal rules. With states becoming more active, it’s essential to stay informed about local laws and regulations. Investing in compliance resources that track state-by-state changes will protect your business and ensure you are treating all consumers according to the specific laws that protect them.
Build Digital Trust: As you adopt AI and digital tools to improve efficiency, make security a cornerstone of your strategy. Clearly communicate your commitment to protecting consumer data and using safeguards. A secure and user-friendly digital experience not only meets consumer expectations for convenience but also addresses their growing fears about cybersecurity, building the trust necessary for productive engagement. Another way to build trust with consumers in debt collection? Social proof.
There’s no shortage of federal regulations in the financial industry. However, there’s a noticeable absence of federal oversight when it comes to governance over artificial intelligence (AI). A regulatory vacuum around AI policies has emerged at the federal level, which has ceded the initiative to individual states. This has prompted a specific set of state regulatory models on AI that are pioneering risk frameworks and how they interact with various use cases like AI debt collection strategies.
The process of navigating the state-led AI legislation and regulations in US financial services is complex, and requires specific industry knowledge. In this blog post, we’re going to dive into why states are leading the charge, and the type of landmark laws and regulations some states are enacting that are going to set the tone moving forward.
Why AI Regulations Are Being Led By States
Back in July, the current administration released “America’s AI Action Plan”, which is focused on building AI infrastructure with over 90 policies with the goal of being a global leader. AI technology is rapidly being integrated into the US economy and financial services industry. While there have been multiple AI-focused bills introduced in Congress over the past few years (including two new bills in July of 2025), none of them have gained enough traction to get passed. This led to increased tension between federal and state governments, which came to a head once the “One Big Beautiful Bill” was passed on July 4th, 2025.
Originally, there was a provision in the bill proposing a ten year moratorium on states enacting or enforcing their own laws on AI. This was a top priority for technology companies who were trying to avoid a more complex regulatory landscape, but the provision was stripped in the bill’s final version. Experts agree this move was a clear signal that states are going to be the primary architects of public policy governing AI for the foreseeable future.
The Federal Stalemate in AI Regulations
One of the root causes for why there’s been federal inaction towards AI regulations is a debate about how the process should look. There is one perspective pushing for a technology-neutral approach, claiming that existing laws are enough to govern AI technology. For example, the existing US laws on discrimination, fraud or defamation already apply to AI technology and businesses, so no new laws would be required. In short, this outlook focuses on punishing bad outcomes from AI rather than trying to regulate the technology itself.
At the other side of this debate are regulators who want rules surrounding AI technology itself. There has been a wave of state laws and regulations that support this approach with Colorado and California pushing new requirements to address AI. They’re not just retooling old laws, states are creating novel legal categories like deployers and developers of AI and assigning them proactive duties of care. It’s a stance that believes states laws on AI need to have specific and rigorous rules in place to better protect consumers.
The Pioneering State Laws on AI You Should Know
The Colorado AI Act (CAIA)
The Colorado AI Act (CAIA), was the first comprehensive, risk-based AI law in the United States that was enacted in May of 2024. The CAIA created a framework for creators and users of high-risk AI (which many financial applications fall into) to follow. The Act states that developers and deployers of AI technology have a duty of “reasonable care” to protect consumers from the risks posed by the technology. One of those top risks called out by the CAIA is called algorithmic discrimination, which is the unlawful differential treatment by AI technology of an individual or group of individuals that are part of a protected class.
The duties for developers and deployers under CAIA are met if those parties adhere to these obligations:
Developer Obligations: These makers of AI technologies have to provide extensive documentation on their products. This includes data on how the AI is trained, what steps are made by the developer to prevent bias, what the foreseeable use cases of technology are and more. Developers also have to notify the Colorado Attorney General within 90 days if their AI technology has caused or is likely to cause an algorithmic discrimination.
Deployer Obligations: Deployers (like a company using AI for debt collection), are required to implement and maintain a risk management program. They also have to perform annual assessments of AI technologies and notify consumers of changes being made. Consumers also have the right to correct any inaccurate data being used by AI systems with the right to appeal any decision they don’t agree with by human review.
The Financial Compliance Exception for Colorado’s AI Act
In Colorado’s AI Act, there’s an important provision for the financial industry and companies using AI for debt collection. The CAIA says that financial institutions such as banks, credit unions and insurers are considered to be already in full compliance with its requirements. However, this provision doesn’t provide universal protection.
This exemption pressures federal agencies and other state banking institutions to develop their own AI governance rules. If they don’t, financial institutions that do business in Colorado could face punitive actions through CAIA. This law is set to indirectly influence the development of national AI regulation standards by creating the bar that other regulators have to meet.
California’s Draft Regulations for Automated Decision Making Technology
Another standout in state AI regulations is California’s draft regulations for Automated Decisionmaking Technology (ADMT). At this time, the draft regulations were approved and will go into effect on January 1, 2026, and they do represent the most consumer rights-focused AI regulations in the US. The regulations are designed for businesses that use ADMT to make important decisions about consumers. The state law definition of “important or significant decisions” includes financial services, lending, debt collection, insurance and much more.
Since consumer well-being is at the core of these draft AI regulations, California is trying to establish three core rights:
Right to a Pre-Use Notice: Before a business uses ADMT for an important decision, they have to notify consumers explaining how the AI technology works in a way that’s easy for them to understand.
Right to Opt Out: Consumers have the right to tell businesses that they don’t want ADMT to be used for making important decisions about them.
Right to Access Information: Consumers will have the right to request information about the logic being used in ADMT processes. For financial institutions, this means businesses won’t be able to just deploy AI technology into their operations without having a deep understanding of how it works.
Many experts say that these rights will cause a shift in how financial institutions interact with vendors who provide AI technology. The ability to easily explain the technology will go from being a nice-to-have, to a requirement. It’s likely there will also be an overhaul of risk management for AI technology vendors. Due diligence being done for these partnerships will have to go deeper to ensure that these new consumer rights are being honored.
What Does This Mean for AI Debt Collection?
AI in debt collection continues to increase in adoption because of how it lets businesses better honor consumer preferences while being able to scale. As bellwether states like Colorado and California are setting the standards for other states to follow, the laws and regulations surrounding AI are shaping up to be a patchwork system similar to that of debt collection compliance.
For businesses that are looking to benefit from using AI in debt collection, you need a partner who’s an expert in compliance and keeping up state law and regulation developments. The state laws and regulations around AI are going to evolve just as fast, if not faster than debt collection rules. Debt collection strategies that are set up to quickly adapt are the most likely to achieve long-term success.
TrueAccord Is Built to Keep Up with Compliance and AI Changes
TrueAccord is an industry-leading recovery and collections platform that’s powered by patented machine learning. Our legal team follows developments in industry regulation updates across the country and maintains machine learning governance models to ensure complete compliance control.
When the world is changing fast, you want a debt collection partner that has proven flexibility to quickly adjust to new rules and regulations. Contact us today and learn more about how you can collect more from happier people.
It’s common when you put a debt collection company’s name in a search engine, one of the most popular queries is asking if the business is legit. For many consumers, there’s an inherent doubt that comes with receiving a debt collection communication, which often leads to the message being ignored.
If a consumer gets reassurance from an unbiased source (like another consumer), any doubts about interacting with the company often fade away. This concept is called social proof, and it’s extremely important in the debt collection industry. Let’s take a closer look at the relationship between social proof and debt collection.
Social Proof Starts with Ethical Debt Collection Practices
The process of having and paying back a debt can be a stressful experience for many consumers, especially when facing financial hardship. It’s an expereince that is more intense and nerve wracking when companies use aggressive collection tactics like excessive calling or threatening. These more forceful approaches are part of the reason why many consumers doubt the legitimacy of debt collection messages.
The first step in reducing consumer uncertainty is practicing ethical and consumer-friendly debt collection. It’s why more companies are taking an omnichannel approach to sending repayment notifications. Digital communication channels like email and SMS/text give consumers more opportunity to engage with messages on their own terms. When the ask for a repayment is more humane, a consumer is not only more likely to act on it, but share their positive experience with others or online.
When a consumer sees that someone else had a positive experience with a certain debt collector, it can reduce their anxiety about getting a repayment notification. Oftentimes a few positive affirmations from people in a similar financial situation is the difference between making a payment and ignoring a message.
Social Proof Can Encourage More Engagement from Consumers
When a consumer receives a debt collection notification, they might feel alone, isolated and unsure of the best way to handle the situation. In fact, this is a common reaction for many stressful events we experience in life. In these situations, many people’s first instinct is to seek advice from others who can relate to their circumstances. For example, if they hear from another consumer that the process of making a payment was easy, engaging with the notification doesn’t feel as intimidating.
Debt collection companies themselves can also offer consumers social proof. A great way to do this is by providing insight into how other customers handled their financial obligations. If your business sends an email notification to a customer, you could offer examples of how other customers with a similar balance chose a payment plan to resolve their debt. A subtle tip on how others in their situation took action can increase the likelihood of that customer making a repayment.
The connecting thread between both these instances of social proof aren’t phrasing things as a demand, they’re suggestions backed by the experience of peers. That’s the core of social proof that can increase repayment rates and build trust with consumers.
Social Proof Helps to Humanize Debt Collection
Social proof has the power to turn the perception of a debt collector from an intimidating unknown to a partner that helps people with financial wellness. By putting this notion into practice, debt collectors can improve their reputation with consumers. What does this look like in action? Here’s a few ways debt collection companies can bring this to life:
Leverage AI in Debt Collection: AI can be used in debt collection to create a better experience for consumers. Machine learning platforms can figure out the best way to honor each individual customer’s communication preferences. These AI processes help make the customer feel more valued, improving the likelihood they will share their experience.
It’s important that all social proof strategies being used by debt collectors follow legal guidelines and don’t overstep on customer privacy. The power of social proof is its honesty, transparency and ethical use. When it is used responsibly and paired with other strategies like leveraging AI in debt collection, social proof can improve recovery rates.
Boost Recovery Rates with AI Debt Collection Strategies
Social proof and AI debt collection strategies are a great way for businesses to collect more from happier people. If you want to empower your debt collection solutions with machine learning and a consumer-first mindset, TrueAccord is here to help.
Contact our team today to learn more about how we can handle all your delinquency needs.
The path to getting a higher education is a courageous decision that millions of Americans start each year when attending college. It sets the foundation for countless careers and drives personal growth that lasts a lifetime. However, education is expensive and paying back the loans can be challenging—an estimated 5.8 million student loan borrowers have delinquent accounts.
This number could get even higher with student loan forgiveness ending, interest on the debt resuming and shifts repayment options. Student loans and debt collection servicing have always shared a close relationship. And the current changes to the federal student loan system is primed to send shockwaves through debt collection services across the nation.
Learn how student loans have changed in 2025 and trends your business needs to look out for as the situation continues to evolve.
How Student Loans Have Changes in 2025
Before we dive into the implications for the debt collection industry, it’s important to understand some of the key changes recently made to federal student loans. The current administration signed into law the “One Big Beautiful Bill Act” on July 4th, 2025. This legislation overhauled the student loan system:
Student Loan Forgiveness Paused: Borrowers on SAVE plans are seeing the end of payment forgiveness. Right now, payments are required and accruing interest on loans restarted on August 1st, 2025.
Creation of Repayment Assistance Plan (RAP): RAP isan income-based plan for new borrowers that requires a minimum payment regardless of a person’s income level. This plan will only be approved for cancellation after 30 years of qualifying payments.
One of the biggest and most immediate effects that student loans will have on debt collection solutions is a surge of collection activity. With loan forgiveness paused, the millions of delinquent accounts are going to be subject to collection efforts. To start, the federal government is putting increased focus on accounts that are 60 days or more delinquent.
This means that standard debt collection communications channels like phone calls and physical mail are going to be much more crowded for the foreseeable future. It’s also likely that some customers your business talks to have this type of financial obligation. That means no matter what debt type you’re collecting, there is more competition to get their attention through non-digital channels and less funds available to repay debts.
We Could See An Increase in Involuntary Collection Tools
When a consumer defaults on their student loan debt, the federal government has strong tools to help them collect payments. After 270 days pass without a payment being made, the government can garish up to 15% of the borrower’s paycheck. Any federal tax refunds can also be withheld and applied to the loan.
Any student loan accounts that are in delinquency or have defaulted can also be reported to national credit bureaus, causing damage to the borrower’s credit score. Consumers who are going through this process may be less likely to make payments on other debts while they try to keep up with student loans. The common thread is that more student loan borrowers could have reduced disposable income once all the changes take effect.
New Student Loan Rules Could Lower Credit Scores
Experts agree that the new student loan rules have a strong possibility of lowering credit scores for existing borrowers. Since the payment forgiveness that started shortly before COVID is ending, borrowers will likely need time to make payments as other costly necessities (like the rise of grocery costs) take their attention.
It’s possible that this will have widespread effects on consumer credit scores, making it more difficult for these borrowers to participate in the financial system. Specifically for student loans, a lower credit score makes it harder for borrowers to consolidate the debt at an affordable interest rate.
A lower credit score also makes it more difficult to access new lines of credit, a common tactic consumers use to pay off debt. Borrowers with a lower credit score will get higher interest rates on new loans, making it more expensive to get loans and more likely that payments made on debts will be in smaller amounts. To help navigate this challenge, debt collection services that offer consumers more payment options could have greater success.
Increase Your Collections Performance with an Industry Leading Platform
Student loan debt is primed to have a lasting impact on debt collection solutions. If you want to leverage AI that adapts to these situational challenges to collect more from happier people, TrueAccord is here to help.
If you want to empower your debt collection solutions with machine learning and a consumer-friendly digital experience, contact our sales team 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
