Category: Industry Interviews

Welcome to the Debt Resolution Funnel: Insights from 20MM Consumers

By on April 11th, 2024 in Customer Experience, Industry Insights, Industry Interviews, User Experience

When it comes to financial and lending services, the customer journey doesn’t drop off once a consumer enters delinquency—in fact, quite the opposite. In the world of debt collection, understanding this unique, and often overlooked, part of the customer journey is critical to securing repayment and debt recovery.

Welcome to the Debt Resolution Funnel. This goes beyond tracking roll rates and primary vs secondary vs tertiary account placements; it instead looks at the debt lifecycle from the consumers’ perspective in well-defined stages with the goal of repayment.

And for TrueAccord, it even goes a step further, with our resolution funnel taking a closer look at how to engage with each consumer in each stage with the optimal messaging, timing, and channel selection specific for that individual. This is possible thanks to our patented machine learning platform, HeartBeat, that automatically improves and optimizes engagement over time, all powered by engagement data from our over 20 million consumer journeys.

While many collection agencies still try to reach consumers through outbound calling (and struggle due to declining right-party-contact rates and tightening regulations), even those using email will typically only develop content based on what bucket the consumer is currently in and use the mass-blast approach for all customers in that particular bucket. Conversely, our patented machine learning engine, HeartBeat, dynamically optimizes the next best touchpoint for every consumer in real-time, including the content, timing, and channel for each customer.

In today’s digital world, one-size-fits-all communication strategies don’t work for any type of consumer engagement—and that has proven especially true in debt collection.

Understanding the Funnel: Tailoring Engagement Strategies for Success

Just as in marketing, where funnels mark the path from awareness to conversion, in debt collection it details the journey from debt placement to resolution. At TrueAccord, we’ve honed our strategies to optimize outreach at every stage of this journey, powered by our intelligent decision engine HeartBeat, delivering an effective resolution process for both our clients and their customers in delinquency.

Let’s take a high-level look at the distinct stages of the TrueAccord funnel and how successful engagement relies on our content, message timing, and communication channels.

Top of the Funnel: Debt Placement, Reachability, and Acknowledgement

  • Debt Placement: The journey begins with debts placed with TrueAccord for collection
  • Reachability: We strive to reach debtors through various channels, ensuring they are aware of their debts
  • Acknowledgement: The consumer acknowledges their debts through interactions with our communications or with agents through inbound calling

Strategies at this stage focus on contact coverage, leveraging and learning through use of diverse channels for communication, and optimizing content and messaging to enhance engagement and acknowledgement rates.

Middle of the Funnel: Active Consideration and Commitment

  • Active Consideration: The consumer explores their payment options, visiting payment forms, or interacting with inbound agents
  • Commitment: The consumer commits to payment arrangements, initiating payment plans or settlements

Here, we concentrate on providing flexible payment options (including completely self-serve a payment portal), improving website usability, and employing targeted follow-up communications to facilitate commitment.

Bottom of the Funnel: Progression and Resolution

  • Progression: Significant progress is made by the consumer towards their commitments, paying at least a percentage of their balances
  • Resolution: The consumer successfully resolves their debts through payment or dispute resolution

Strategies in these stages prioritize payment plan management, personalized communications based on HeartBeat’s machine learning insights, and celebrating debtor progress to foster brand affinity.

Driving Success: Strategies for Each Stage

  • Content and Messaging: Crafting compelling content tailored to specific consumer and funnel segments and leveraging HeartBeat’s machine learning for engaging messaging.
  • Channel Optimization: Utilizing diverse communication channels, such as SMS and email, based on consumer preferences and behavior.
  • Payment Offerings: Offering flexible payment options, including settlements and extended payment plans, to accommodate diverse financial situations.
  • Website Usability: Enhancing website design and functionality to facilitate easy navigation and understanding of payment options.
  • Continuous Discovery: Practicing ongoing experimentation and learning from consumer interactions to refine strategies and improve performance continually through HeartBeat.

Empowering Resolution Through Better Engagement Every Step of the Way

Shifting the mindset of the debt resolution journey only being defined through roll rates and placements to a consumer-centric resolution funnel instead can be a significant overhaul for any organization’s collection strategy. Whether communicating in-house, using a call center, or partnering with a third-party collection agency, adopting the nuanced approach we outlined above for better results takes time, a robust content library, advanced machine learning, and a platform able to scale to meet both your business’s and customers’ needs.

TrueAccord’s machine learning engine, HeartBeat, doesn’t just optimize our strategies for engagement and commitment. It leverages interaction signals to identify consumers at risk of breaking plans and automatically adapts to keep them successful until resolution. Our approach aims to engage and empower every step—and every funnel stage—along the way.

As we continue to listen, learn, and innovate, we remain committed to delivering exceptional debt collection experiences that prioritize consumer well-being paired equally with debt recovery. At TrueAccord, we’re not just collecting debts; we’re fostering resolutions and helping consumers build brighter financial futures.

Ready to get started? Schedule a consultation today»»

How Consumer Credit Trends Impact Debt Collection in 2024

By on March 5th, 2024 in Customer Experience, Industry Insights, Industry Interviews, User Experience

Today’s current economic climate is already influencing consumer spending and credit in 2024, and is becoming a hot topic for businesses seeking to engage past-due customers.

Economic Growth in 2023, But Slowdown Expected in 2024

Last year proved that the US consumer has been very resilient to the rumblings of a potential recession and continued to spend with surprising growth all the way through the end of 2023.
Despite inflation and high interest rates, consumers helped the economy end the year in a far better position than most predicted.

And consumers reported an uptick in optimism about the financial state, according to Deloitte’s ConsumerSignals financial well-being index, which captures changes in how consumers are feeling about their present-day financial health and future financial security based on the consumer’s own financial experience. We saw an increase to 101.4 in November 2023, up from 97.6 a year ago. Additionally, WalletHub’s Economic Index, which measures consumer satisfaction, rose by about 4% between January 2023 and January 2024.

But even as economic experts adjusted their outlook towards a soft landing and consumers reported a more positive financial outlook, 2024 is still expecting a slow down in consumer spending.

“Growing debt balances, stubborn interest rates and elevated prices are still a thorn for consumers, and contribute to their overall financial stability,” explains TrueAccord CEO Mark Ravanesi in his Q4 Industry Insights: Cautious Optimism with a Side of Holiday Hangover. “For lenders, service providers and debt collectors, guaranteeing repayment will still be a challenge [in] 2024.”

As Consumer Delinquency Rises, So Does Consumer Confusion

That financial holiday hangover Ravanesi described is a harsh reality for consumers: approximately one-third of American adults go into debt to pay for holiday expenses, contributing to their overall financial stability year-round. Credit card balances hit a trillion dollars in 2023, but that unprecedented milestone proved to just be another number as credit card balances continue to grow—by the fourth quarter balances increased to $1.13 trillion and the share of those balances that were at least 90 days delinquent approached 10%, an increase of more than two percentage points in a year.

In January, overall delinquency grew with a 2.31% increase in delinquent accounts and 10.49% in delinquent balances month-over-month. Today, about 61% of American households have credit card debt and the average credit card debt balance sits at $5,875.

Bottom line: households took on more debt at the end of last year and we’re seeing loans increasingly going bad, according to data from the Federal Reserve Bank of New York, leading to a shift in consumer spending for 2024.

On top of historic credit card balances, delinquencies continue to climb across the board: automotive, mortgage, bank cards, and unsecured personal loans.

The rising popularity of the Buy Now, Pay Later (BNPL) options and their corresponding delinquencies are also a piece of the puzzle, but one that is not currently captured by the Bureau of Economics and falls into a category known as “phantom debt.”

“Today’s consumer is using more and different financial products,” shares Ravanesi. “Buy Now, Pay Later was a big driver of purchasing power [in 2023] amidst elevated interest rates. While a helpful product for consumers, BNPL can be tricky as it doesn’t show up on most credit reports and can be an invisible and unaccounted-for debt burden.”

With so many different BNPLs offered, consumers can be borrowing from a variety of different lenders all at the same time and it is becoming more difficult for them to keep track of the different payments—and easily slip into delinquency. This confusion can be especially detrimental considering consumers using BNPL as more likely to be “financially fragile,” as reported by the NY Fed, having credit scores below 620, being delinquent on a loan, or having been rejected for a credit application over the past year.

“It’s becoming more and more confusing for consumers,” TrueAccord founder Ohad Samet explained in a recent webinar. “And we’re seeing consumers often need help to organize the different debts.”

And then we add student loans back into consumers’ repayment mix…

The Impact of Resumed Student Loan Repayments

Millions of people are resuming another financial obligation every month: their student loan payments. This introduces one of the defining questions of 2024 for lenders and debt collectors:

How will student loans be prioritized among other payments and debts?

It’s a legitimate concern considering surveys found 45% of respondents used the student loan forbearance period to tackle other debts, including paying down mortgage/rent expenses (27%), credit cards (26%) and other past-due bills (24%)—and even before forbearance was lifted, 85% of borrowers already anticipated facing financial hardship due to student loan repayment, with 49% saying they’ll have a hard time paying other bills. In fact, 28% of student loan borrowers say the resumption of federal student loan payments will likely require them to take on new debt to manage their personal finances.

Only time will tell, but so far student loan repayment rates have been low amongst the 22 million Americans affected—in the first month of resumed payments, 8.8 million borrowers missed their student loan payment, equating to 40% of loan holders.

Whether they missed that first payment or not, student loan repayments resuming again are having a significant impact for those who borrowed—91% say financial stress is impacting their mental, physical wellness and student loan debt is a key driver of this financial stress.

So how can lenders and collectors effectively recover debts in 2024 given the rising delinquencies and rising financial stress for consumers?

Right Message, Right Channel, Right Time for Better Consumer Engagement and Debt Recovery

Consumers have more stress and demands on their attention than ever before so it should make clear sense that consumer experience is critical for an organization’s reputation, long-term success with customers, and how effectively you can collect even in late-stage delinquency.

Research shows that contacting first through a customer’s preferred channel can lead to a more than 10% increase in payments and that 14% of bill-payers prioritize payments to billers that offer lower-friction payment experiences. Plus, 71% of consumers expect personalized experiences, which means one-size-fits-all outreach isn’t going to cut it in collections. Your business must be able to engage with the right message, the right channel, and the right time to recover the most funds possible.

“If there’s one thing we’ve learned from our consumer interactions, including the 16.5 million we added in 2023, it’s that no two consumers are the same, and what works for one may not work for the next,” explains Ravanesi. “That’s why options are so important—in communication channel, customer support method, and perhaps most importantly, in repayment.”

Personalization of the collections experience—from channel to time of day to specific message—is critical in cutting through the noise and driving engagement and commitment, especially in today’s increasingly digital world.

“Digital is deeply, deeply ingrained in every group of the population,” Samet observes.

And consumers are engaging on more digital channels than ever before:

  • 65% of American consumers have paid a bill by mobile device in the past twelve months
  • 54% have used an online portal supplied by a biller
  • 85% of consumers are already using digital bill pay
  • 41% of consumers cite ease and convenience and 23% cite faster and instant payments as the most important reason to choose a digital channel
  • 59% of consumers stating email as their first preference for debt collection, according to a FICO survey (versus only 16% want to receive a phone call)

Research from McKinsey concludes that consumers who digitally self-serve resolve their debts at higher rates, are significantly more likely to pay in full, and report higher levels of customer satisfaction than consumers who pay via a collection call.

Providing multiple repayment options, communicating through a variety of channels, reaching out at the optimal time of day, delivering the message in a way that best resonates with the consumer—all of these factors play a role in how effective your debt recovery strategy will be.

The TrueAccord Difference

Partnering with a debt collection agency for late stage debt recovery provides a number of advantages, including improving debt recovery rates, reducing the workload for lenders, offering access to specialized resources, and providing flexibility and customization. Every business is different, just like every customer’s situation is different, but TrueAccord has proven for over a decade that our digital-first, omnichannel approach drives improvements in liquidation rates by engaging consumers with the right message, through the right channel, at the right time.

At TrueAccord, our mission to help organizations recover more (from happier consumers) is comprehensive and tailored to each business’s specific goals and individual customer expectations. Since 2013, we have provided win-win solutions between businesses and consumers in debt. By using our patented machine learning engine, HeartBeat, we create a personalized journey for each consumer and keep optimizing for the ideal message, outreach time, and communication cadence to elevate performance.

Ready to get started? Schedule a consultation today»»

Using Regulation F to Maximize Recovery: Highlights from CBANC Webinar with Kelly Knepper-Stephens

By on October 20th, 2022 in Compliance, Industry Insights, Industry Interviews, Webinars

Just as technology has evolved leaps and bounds, so have consumer communication preferences with that technology, especially when it comes to debt collection. So in 2021, the Consumer Financial Protection Bureau (CFPB) rolled out Regulation F under the existing Fair Debt Collection Practices Act (FDCPA). Regulation F seeks to provide additional clarity around the key FDCPA prohibitions covering everything from harassment, such as the 7-in-7 call caps, to sample language for the initial communication with enhanced disclosures and information to help consumers identify their accounts.

Now, one year after Regulation F has gone into effect, some organizations and lenders still have questions about these new rules and how they can impact their business overall.

To help elucidate the matter, TrueAccord’s Chief Compliance Officer and General Counsel, Kelly Knepper-Stephens, sat down with the CBANC Network to discuss Using Regulation F to Maximize Recovery.

Below are just a few highlights from the in-depth discussion, but we encourage you to watch the full on-demand webinar to learn more about:

  • Safe Harbors in Regulation F (and if they are worth it)
  • Social Media communication best practices
  • Rules on contacting consumers including from other laws like the TRACED Act
  • State and municipal laws applicable to debt collection
  • and more!

Watch the the full webinar Using Regulation F to Maximize Recovery here»»

Highlights from “Using Regulation F to Maximize Recovery” with Kelly Knepper-Stephens*

We have found at TrueAccord that maintaining strong compliance with Regulation F doesn’t decrease your ability to recover defaulted debts from consumers. We know that consumers like digital collections, because we primarily communicate using digital channels. 

At TrueAccord, we find that 65% of consumers are opening at least one email—and 35% click on the link in the email that directs the customer to the webpages with information about the account settlement offers and payment plans, how to dispute, et cetera. For TrueAccord, 96% of consumers resolve their account without any human interaction whatsoever because they find the information that they need through the self-serve platform.

The regulators understand the growing preference for digital and self-service methods, and have acknowledged in Regulation F that it is permissible for a debt collector to communicate with consumers via these digital channels, including adding rules about how to use social media in debt collection. 

TrueAccord was very active in the CFPB’s Regulation F rulemaking process for this reason. We served on the small entity review board business panel in order to provide feedback as to the potential impacts of the draft proposal on our small business. We also provided a lot of data and information on how we designed our digital communications, such as having unsubscribe links in all email communications. This was important because at the time TrueAccord was one of the only companies in the industry using digital. The end result actually mimicked some of our best-practices practices.

Engaging the consumer is the fastest path to resolution, so no matter the channel—email, text message, phone calls, et cetera—using all channels compliantly to identify the right time, right channel, right message to engage the consumer is the ticket to success. 

Watch the on-demand webinar, Using Regulation F to Maximize Recovery, to learn more»»

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

Top Five Compliance Questions Answered by TrueAccord Compliance & Collections Professionals

By on October 11th, 2022 in Compliance, Industry Insights, Industry Interviews

Whether you’re a startup or an established organization, understanding the laws and regulations that apply to debt collection can be overwhelming. Compliance is always evolving as new laws and regulations are passed, new technology is introduced, consumer preferences shift, and court decisions or regulatory guidance suggest modifications to best practices. Fortunately, the knowledgeable team at TrueAccord is here to help break down some of the top questions around compliance in the collections industry.

The Questions:

  1. What are the major regulations lenders need to know about?
  2. What are the consequences of non-compliance?
  3. What kinds of businesses need to comply with these regulations?
  4. What are the top challenges that you see ahead for compliance in collection?
  5. What keeps a legal or compliance professional in collections up at night?

We asked some of the TrueAccord compliance professionals to provide insight to these top questions.*

*This blog is not legal advice. Legal advice must be tailored to the particular facts and circumstances of each unique matter

1. What are the major laws and regulations lenders need to know that govern debt collection (and debt collection service providers)?

Steve Zahn [SZ]: Right off the bat, obviously the Fair Debt Collection Practices Act, or the FDCPA, is the major law lenders need to know about for debt collection. There are also some similar state laws, but the FDCPA is the big one that governs debt collection activity.

Kelly Knepper-Stephens [KKS]: The CFPB just finished a rulemaking in 2021 related to the FDCPA, referred to as Regulation F, in an effort to modernize and work through some of the issues that occurred and played out in the courts over the last 45 years since the FDCPA took effect. The TCPA—the Telephone Consumer Protection Act—is another law that impacts debt collection. It doesn’t just regulate phone calls. It also regulates text messaging and it regulates leaving pre-recorded messages for consumers. So it’s important to be aware of how that impacts the types of consumer communications that a business will be using.

Lauren Valenzuela [LV]: One of the most important laws that sometimes gets overlooked is the Dodd-Frank Wall Street Reform and Consumer Protection Act. This is what created the Consumer Financial Protection Bureau, the CFPB. It’s also what created what we know as UDAAP—Unfair, Deceptive, or Abusive Acts or Practices. The CFPB gets its UDAAP authority from that particular law, and it also gave the CFPB authority to interpret and make rules for the Fair Debt Collection Practices Act.There are other laws that impact our work as well, such as the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, Electronic Signatures in Global and National Commerce Act, known as the E-Sign Act, among others.

Leana Lares [LL]: Additionally, if a business is working with consumer personally identifiable information, private information, then they should definitely know about all of the different federal and state privacy and data security laws.

2. What are the consequences of non-compliance?

LV: Consequences of non-compliance are very vast. Non-compliance can lead to increased consumer complaints. It could also lead to enforcement by state or federal regulators, which could result in fines and penalties. It could result in consumer litigation. Non-compliance can also jeopardize an agency’s collection license and ability to conduct business in a particular state or locality. But most importantly, the consequences of non-compliance is erosion of consumer trust and also your client’s trust. So compliance is incredibly important for everybody and especially for us here at TrueAccord.

SZ: In litigation, penalties can include: (a) statutory damages, e.g., up to $1,000 for the FDCPA or $500-$1,500 per violation for TCPA; (b) actual damages, e.g., physical manifestations that are the result of emotional distress; and/or (c) punitive damages, if the conduct is so outrageous or intentional that it gives rise to addition damages designed to punish. In addition, the court or regulatory agency can award costs and attorney fees to the prevailing party and can also enter an order prohibiting or requiring certain conduct in the future. Finally, regulatory agencies have the ability to order disgorgement of funds collected and/or an award of damages to the agency itself.

3. What kinds of businesses need to comply with these regulations?

LV: Third party debt collectors need to comply with these laws and regulations, and sometimes so do servicers and first party debt collectors in some form or fashion.

For example, creditors are exempt from some of the laws, such as the federal FDCPA, and sometimes they’re not (such as the case with some state debt collection laws). So it really just depends on the specific law, but needless to say, everyone should really be aware of the laws and regulations that apply to this particular type of line of business. Because even if you don’t have to follow it, sometimes there’s a lot of best practices that can be found in these laws and regulations as well.

KKS: Not just debt collectors. It really depends on the type of work that a particular business conducts and whether or not a statute covers that conduct. For example, the TCPA governs entities making phone calls, sending text messages, or leaving pre-recorded messages for consumers, so it regulates any entity, public or private, using these forms of communication. For the FDCPA, it regulates the collection of a debt, so a business needs to look at what is the definition of “debt” and are these accounts “debts” under that definition. As well as, whether the activities of the business fall under the statute’s definition of a “debt collector” or any of the exemptions?

4. What are the top challenges that you see ahead for compliance in collection?

LL: Some of the top challenges that we see ahead in compliance definitely has to do with the ever-changing landscape of our industry. For example, consumer privacy laws are popping up everywhere. Here in the United States, many of the privacy laws borrow aspects of the GDPR. California adapted their privacy law, the California Consumer Privacy Act (CCPA), to mirror the concept of transparency and granting individuals new rights over their personal information. We are seeing many different states implement privacy laws and all the different states have different rules (e.g., California, Virginia, Utah, Colorado, Connecticut). Some of them parallel each other, some of them are drastically different. So it’s very important to keep up with all of these things, and TrueAccord does a great job of that. 

LV: We’re seeing compliance professionals have to partner more and more with information security. It’s not a challenge so much as an area where I think compliance professionals in the industry are really going to have to increase their knowledge and competencies in the information security discipline. Also, making sure that they’re just staying ahead of the curve when it comes to best practices with cybersecurity and data privacy. We need information in order to conduct our business and to do it effectively;so making sure that you have all the necessary safeguards in place is of paramount importance. 

Another top challenge for the collections industry at large is figuring out how to best use machine learning (a subset of AI)—not only learning how to use it, but also how to mature your compliance management system (CMS) so that it accounts for your use of it. If you’re using any type of analytics or algorithms, or if your service providers are using any type of analytics or algorithms, you need to evaluate your CMS to make sure you have proper oversight of that technology.

5. What keeps a legal or compliance professional in collections up at night?

KKS: Uncertainty with changing regulatory rules. It’s relatively easy to provide legal and compliance advice when you have clear rules of the road. But when there are statutes with different interpretations, regulators with different approaches, or a patchwork of differing court opinions on a given topic it is more challenging. 

LV: The ability for a company to stay nimble while avoiding compliance fatigue. You have to be a cheerleader for compliance and keep up the energy, make sure everybody understands their compliance obligations so that they can adapt to it and operationalize it. Sometimes there can be ambiguity in the application of a certain law or a regulation to a particular set of facts or a particular technology or system. We often need to create clarity from ambiguity, while also doing what is best for consumers, what’s best for business, and lead the way in creating best practices when there may be ambiguity. 

SZ: As an Associate General Counsel at TrueAccord, not much keeps me up at night. We have a tremendous system, compliance program, and corporate culture of compliance and striving to be polite and friendly with consumers.

Learn more in Compliance & Collections Resource Center or schedule a consultation today!

The Future of Collections & Compliance: A Conversation with TrueAccord’s Associate General Counsel and Director of User Experience

By on October 5th, 2022 in Compliance, Customer Experience, Industry Insights, Industry Interviews, Product and Technology, User Experience, Webinars

Delivering communications to your customers has always been a compliance challenge with the plethora of laws, regulations, court decisions, and regulatory guidance in the debt collection space. Today with more communication channels available and regular communication from debt collection regulators—via consent orders, compliance bulletins, supervisory highlights, and even press releases—your compliance management systems and design must be flexible and easy to update.

To get expert insights on the newest compliance issues and opportunities that need to be front of mind when sending digital communications to effectively engage your customers, Associate General Counsel Lauren Valenzuela and Director of User Experience Shannon Brown teamed up to discuss the Future of Collections & Compliance in TrueAccord’s latest webinar.

Watch the full webinar on-demand here»»

Below are some of the key takeaways from their discussion, plus attendee poll results on top compliance questions.

*This blog is not legal advice. Legal advice must be tailored to the particular facts and circumstances of each unique matter.

The Current State of Compliance

Lauren Valenzuela [LV]: Needless to say, over the last 10 years the CFPB has fundamentally changed how we think about and approach compliance. That has really influenced our industry and how we think about communications in debt collection.

LV: Over the last decade the CFPB has taught us that compliance is an evolving thing. It’s not something that you can set and forget. It is something that is dynamic and that must constantly evolve and mature in order to be effective, because our environment is constantly changing.

Attendee Poll Question: What is the biggest compliance issue you face when trying to engage with your customers?

Changing Consumer Preferences for Collection Communications

LV: The CFPB recently published a blog and shared that it is a “mobile first” agency, meaning that most people who visit its website are using mobile devices or smartphones. Here at TrueAccord, what does our information show about mobile usage?

Shannon Brown [SB]: Consumer mobile use has skyrocketed. In 2016, about a quarter of our consumers were using their phones to read emails and visit our website—and that number has increased to consistently above 80%. We’ve put a lot of effort into making sure our emails and website are responsive to make sure we’re meeting the needs of our consumers who are overwhelmingly on mobile. We’ve made sure our pages are able to load faster for consumers that have less stable cell connections and really made sure our interactive elements are big and optimized for tapping with a finger instead of clicking with a mouse. As far as communications, our consumer research has really shown that most consumers don’t answer the phone and want to be contacted through digital channels—they want a multi-channel experience.

LV: So we’re seeing consumers increase use in mobile phones. Even the Bureau has seen that, and we’re seeing banks increase their use of digital technologies to communicate and facilitate transactions and engage with their consumers as well.

What’s the Role of the Legal Team in Your Collections Strategy?

LV: There needs to be a partnership between compliance and pretty much all core functions, and especially at a fintech company like TrueAccord where our technology and our digital communications platform are the center of what we do to help consumers. It’s really neat to see compliance interwoven, and I think that’s reflective of its compliance management system and company culture.

Compliance Management System Evolution

LV: Ten years ago, many collection agencies were likely in the undisciplined stage, where there was some type of compliance ongoing, but it didn’t have much structure—processes may be undocumented, potential exposure to vulnerabilities that expose themselves on lawsuits, for example.

The next iteration is reactive, meaning there is development of some policies and procedures, controls are identified, and the company is responding to issues and incidents reactively.

The next level is calculative. At this level, leadership is actively engaging the organization in compliance, risk assessment processes are maturing, corrective action plans are being developed and executed to remediate deficiencies.

This next level is proactive, meaning employees are trained and following clear policies and procedures, and such procedures have built in intentional redundancies. The organization is being proactive in identifying and responding to issues and incidents and is self-identifying deficiencies and essentially executing on comprehensive corrective action plans.

Generative means that there’s continuous improvement towards challenging goals, which are driven by data analysis. There’s critical evaluation of policies and procedures and controls, and risk is integrated in operations. Issues and incidents resolutions are driven by stakeholders and really enhanced controls.

Attendee Poll Question: Which category does your Compliance Management System (CMS) fall under today?

LV: So no matter where you’re at within your compliance management system and no matter what maturity level, the important thing to remember is that you don’t have to stay there—you can evolve. We can’t stress this enough. Compliance is an evolving and dynamic thing, and should be constantly evolving to stay effective in whatever environment it is in.

The fact that TrueAccord has a well-oiled compliance management system allows us to study that climate and then figure out how to translate it and make tangible improvements in our consumers’ experience. That’s something we encourage everyone to do: think about the consumer experience and the environment you’re collecting in, because it looks remarkably different than it did five years ago for example, and we should all be evolving.

The Product Perspective

LV: How has the CFPB influenced how we develop our products here at TrueAccord?

SB: Compliance has been built into our product development life cycle. Besides frequent meetings with our compliance team for feedback and approvals throughout the life cycle, we’ve designed and built our product so we can be nimble in responding to regulatory changes, which we know happen a lot.

LV: There are numerous federal, state, and local laws. Can you give some insight into how we at TrueAccord keep up with all of that?

SB: One of the ways we efficiently keep up with the requirements is through our code-driven approach.

But what does that mean practically? It means, for example, that for any phone call coming in, our agent knows exactly what disclosures need to be given to that consumer via our system, and then gives them an opportunity to log it. It means that any email that goes out has all the necessary disclosures appended, such as out of statute disclosures, state disclosures, et cetera, and these are all kept in our code base. Not only does it take the guesswork out of the equation for our agents and our content team that’s sending communication, it reduces human error. It also means that anytime anything needs to be updated, for example, a wording in a disclosure or when a new disclosure needs to be added, we can do it in one place instead of across a variety of templates and areas of the website. We can do it in one place and then that change propagates throughout the system. This helps us to react to changes really quickly.

Our compliance team is involved in every aspect of the process. They start as educators for the whole product team—we’re all aware of regulatory considerations and know where and when we need to ask for feedback and approvals from our compliance team. So they aren’t just making sure that agents are acting compliantly, but that the product team has that knowledge as well.

And as a product team, we have this wonderful research function that’s constantly talking to consumers and trying to understand their needs and asking for feedback, which we share with our compliance team so that they can go and advocate for consumers when they are talking with regulators and legislators

Future Forecast: Where is Compliance Heading in the Collections Industry?

LV: The next iteration of compliance can be seen in some of the recent CFPB and FTC activity. Last year in 2021 for example, the CFPB published a new section of its supervision and examination manual, specifically an information technology focused compliance management review section. The Bureau is looking at any type of technologies that you may employ, like machine learning models, algorithms, or analytics.

If you’re using any kind of algorithms or machine learning to help inform any aspect of your collection strategy—or if any of your service providers are using any type of algorithms or machine learning to help provide a service to you—you must pay attention to this section of the manual because it’s incredibly informative. We’re seeing the CFPB and the FTC addressing companies’ use of data and technology, wanting to make sure that companies have proper governance and oversight of it.

All of this recent activity shows how compliance within any company, more than ever before, must really take a cross functional approach to its work in order to keep up with the evolving environment. The compliance function should not be siloed. It really needs to be in partnership with all different disciplines and functions within the organization. We’re seeing right here and now and into the future, your information technology professionals, your information security professionals, your product professionals, your engineers, your data scientists, anybody who looks, touches, thinks about data and technology should all be working with compliance

Attendee Poll Question: Which of the following are you most interested in for the future of compliance and collections?

Three Key Takeaways

LV: Compliance is more than a department, it’s more than a program, it’s more than a system. It should be part of an organization’s cultural DNA. So when you think about compliance, wherever you are within an organization, think about how you can make it part of your organization’s DNA.

SB: Concentrate on building your tools to be nimble to the regulatory changes. Things like the design systems and the component libraries that allow you to make those changes quickly and easily, and make sure that they’re made everywhere across the system so you don’t have those older disclosures hanging out somewhere that someone forgot to change. Build your tools so you can make changes in one place efficiently.

LV: As our environments get more sophisticated around us, compliance professionals need to collaborate cross functionally more and more with other disciplines within a company to be effective and stay ahead of the evolution.The more the industry uses data and technology, we have a responsibility to make sure that it is being used in accordance with the law and best practices.

Have more questions about compliance in collections? Schedule a consultation with TrueAccord to learn more»»

Q&A: Code-Based Compliance for Collections

By on September 27th, 2022 in Compliance, Industry Insights, Industry Interviews, Product and Technology

Just as technology has evolved leaps and bounds, so have consumer communication preferences, especially when it comes to debt collection. The Consumer Financial Protection Bureau (CFPB) recognized in Regulation F—rules updating the Fair Debt Collection Practices Act (FDCPA)—that consumers in debt want to communicate with debt collectors through digital channels, like email and SMS.

Under the FDCPA, Regulation F, and other state laws, these digital channels have the same compliance requirements as calls, such as no harassment or abuse, no false or misleading representations, and no unfair practices. Even though these additional channels have the similar compliance requirements, businesses must still manage these requirements across all channels and have the capacity to update requirements as new laws are passed, new cases come out, and new guidance is released from regulators causing a need to change in a compliance practice. How can businesses ensure compliance through the evolving regulatory landscape?

Code-based compliance is a critical component for the debt collection industry.

We interviewed five key stakeholders in this process to get different perspectives on what code-based compliance is and how it benefits businesses, lenders, consumers, and auditors. Read below for insights from: Eric Nevels, Director Operational Excellence; Hal Eisen, VP Engineering; Kelly Knepper-Stephens, Chief Compliance Officer and General Counsel; Michael Lemoine, Director Client Success; and Milo Onken, Director Quality Assurance.

What is Code-Based Compliance?

Eric Nevels: When an algorithm is used to help make decisions on consumer communications in debt collection, a code-based compliance system would be coded into that algorithm or work side-by-side with the algorithm to ensure that all digital communications fall within federal and state laws and regulations.

Michael Lemoine: Here’s an analogy to help explain code-based compliance: You lace up your new running shoes. You scoured all the online reviews and this pair provides the best ankle support. You ate a light but fuel packed breakfast, no mid run slump for you. You eyed the weather app on your phone, all clear and perfect temp. Hydrated, check. Headphones, check. Mood, great! You’ve got this, everything is under control and accounted for. Off…you… go!

Even if you’re not a big runner this sounds like a safe and productive way to start a day. But what if instead of checking for rain and eating a little oatmeal to make sure you had a good jog, you had to manually complete a full body diagnostic and perform microsecond electrical and chemical adjustments to your body just so you didn’t become disabled or even die while getting a little exercise? Not so safe and productive now. Is the risk of immediate death worth the effort and small reward of a single run?

Every second your body automatically, without thought or effort, reads your current condition and reviews thousands of risks and initiates controls, responses, and actions to keep you alive—called the autonomic nervous system. Code-based compliance is the autonomic nervous system of an organization’s risk and control program. Now, it’s not as dramatic as life and death, but code-based compliance can supercharge any compliance management system because once the code has been programmed and deployed the system always follows the programmed rules leading to consistency and accuracy.

How is Code-Based Compliance Different From More Traditional Approaches to Compliance?

Eric Nevels: In the absence of code, human beings would need to check against the various restrictions on communications. Anytime humans are involved, even with rules and procedures in place, it is possible for errors to occur. With a code-based system, it is impossible for that action to take place.

Kelly Knepper-Stephens: Certainly it’s better than manual compliance because with manual compliance you have an opportunity for human error. But it doesn’t mean that code-based compliance is “code it and forget it.” Your coders need a process to quality check the code. And your compliance team or a front line control team needs to monitor to make sure the coded compliance rules are working as you intended them to work.

How Does This Approach Benefit Collection Compliance Strategies?

Hal Eisen: Code-based compliance is great because it never gets tired or distracted and is not subject to any of the other human frailties. Done correctly, it can be efficiently applied to a wide range of software products without needing additional investment. Most compliance rules were written for the benefit of consumers. The better we comply, the safer consumers are. Consumers should have accurate disclosures, fewer annoying interactions and feel better about the whole experience.

Eric Nevels: Lowers operational risk and ensures compliance with regulations. Additionally, it is much easier to update the code when regulations are changed. It helps ensure that they are being treated within the bounds of the law, which is their benefit.

Milo Onken: The code-based approach ensures accuracy and tangible evidence for compliance audits. Collaboration with different internal teams and Legal ensures we check, implement, and follow industry compliance directives.

A Code-Driven Future for Debt Collection

Code-based compliance offers predictable and consistent collections methods when coupled with digital platforms. New technology can be mistaken as a risky investment, but digital debt collection systems offer more compliance security and more transparency—for consumers and creditors. Digital collection solutions not only evolve to meet consumer needs, but they can also continually adapt to changing regulations and quickly meet compliance requirements.

Beyond code-based compliance, what are compliance issues unique to collections that need to be front of mind when sending digital communications to effectively engage your customers?

Join us Thursday September 29th at 1pm ET for our interactive webinar, The Future of Collections & Compliance, hosted by TrueAccord Associate General Counsel Lauren Valenzuela and Director User Experience Shannon Brown.

Reserve your space now for an interactive discussion on:

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

Register now for the upcoming webinar»»

*This blog is not legal advice. Legal advice must be tailored to the particular facts and circumstances of each unique matter.

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

By on August 9th, 2022 in Industry Insights, Industry Interviews, Webinars

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

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

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

What are we seeing in consumer credit trends today?

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

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

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

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

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

The New Standard of Excellence in Debt Collection

By on December 7th, 2021 in Industry Insights, Industry Interviews

By Sheila Monroe

TrueAccord’s Chief Growth Officer, Sheila Monroe, was recently featured in the New Standard in Debt Collection panel as part of the Beyond Digital: The Next Era in Collections summit. Having held numerous executive-level positions at TrueAccord on top of a multi-decade career in collections, Monroe is uniquely qualified to recount the historical practices of the collections industry from her point of view. In this blog post, Sheila shares her perspective on where the collections industry is heading in 2021 and beyond.  

Much has changed since I started in the collections industry in 1986 and not just in the types of communication channels used, but also in the collection strategies employed. For example, the first real meaningful change was a move from a one size fits all strategy to a much more sophisticated segmentation of consumers. 

That means “customer A” gets a very different experience than “customer B” based on their individual repayment behaviors while in collections. This type of segmentation helped companies decide calling intensity and their letter strategy: Is it a reminder letter? How frequently do we call? When do we call? 

Once organizations mastered segmentation, operational efficiency (deploying and optimizing tools aimed at reducing the amount of calling) helped the industry start down a path of reduced staffing requirements and operational effort. Collection dialers have been around for years but with the new effort towards efficiency, agencies realized that customers were willing to make commitments and payments in the interactive voice response (IVR) system. Agencies started using interactive voice messaging (IVM) to automate outbound calling journeys as much as possible. Sophisticated skiptrace waterfalls became automated as companies got smarter about data management to increase contact rates.

The industry is still largely phone based but most collection businesses are now starting to adopt digital channels, like email and SMS. Though digital channels still only make up a small percentage of total outbound activity across the industry, we’ve seen regulators respond to these modern communication platforms with the introduction of Regulation F. As a company that is leaps and bounds ahead of the industry average when it comes to digital communications, we’re excited at TrueAccord about the new legislation. What Reg F says is, “all that disruptive phone calling that is happening, it’s not what consumers want. It’s not a great experience for consumers.” It’s clarified and given a strong nod toward using digital channels. When I think about that shift toward digital, a lot of players in the industry are just doing it for efficiency and some, frankly, out of survival because of Reg F.

The CFPB is doing a good job recognizing that consumers want a change, so they are forcing collection companies to innovate or get out. They understand that consumers want to communicate in more convenient, less disruptive channels and they want to feel safe communicating on their terms. The reality is that most consumers want to pay their debts. If there is respectful personalized communication and a simple way to sign up for a repayment plan, they likely will. 

That brings me to where we are today and this continuing shift of behavior. When it comes to innovation and segmentation, changes have been about making things more streamlined for contact centers. All of that innovation has been focused inward to figure out how the company can optimize to get more for less. There’s been little attention paid to the consumer and their preferences. How can engagement with a consumer about a really sensitive topic be done in a way that meets their needs? How can we simplify the process for the consumer? How can we start to remove that stigma from the conversation? In most industries, you design with the consumer in mind and the money will follow. 

Now, we’re in the age of the consumer. Today’s consumers crave simplicity, convenience and personalization. We live in a world in which we can listen to whatever music we want to hear, stream the content we want to see, connect with friends from around the world, get a ride, and have food delivered to our doorstep all with a couple of clicks. All those apps which we know and love, pay attention to our preferences to make it even easier the next time we open them to stream or watch or buy. 

Effort is a thing of the past. Effort is reserved for things we want to do now: play a sport, take a hike, or go to our kid’s recital. So now, financial services, and yes, the collection process, which touches millions of consumers each year, needs to become simple, convenient, intuitive, personalized and ultimately, low effort.  


This content originally appeared as part of the Beyond Digital: The Next Era in Collections summit. Watch the entire summit here.

TrueAccord Talks: Fintech Disruption in 2021

By on July 15th, 2021 in Industry Insights, Industry Interviews

Halfway through 2021, e-commerce and consumer spending continue to see the impact of government stimulus payments while consumers look for new ways to invest and leverage their money. Simultaneously, all sectors of fintech grew during the pandemic, and this growth has not shown signs of stopping. Investment and lending platforms have grown in users by the highest percentage during the pandemic — with increases of 23 and 25 percent, respectively (McKinsey).

With the digitization of banking and financial services now firmly part of our new normal, is “disruption” still possible in fintech in 2021? TrueAccord co-founder and CEO, Ohad Samet, recently sat down with Julie VerHage-Greenberg of Fintech Today to discuss what the next horizon of fintech disruption will look like — and how financial institutions of all types can stay ahead of the curve and create groundbreaking solutions this year.

Watch the full “TrueAccord Talks” episode for more insights, but key trends to watch in fintech disruption in 2021 include:

  1. Solving “structural problems”: Fintechs, unlike many traditional financial services companies, are not just putting old products online and calling them digital, but rethinking the approach to existing problems and building new, better solutions.
  2. Digitization for customer experience: While many companies have focused on digitizing the customer experience, those that haven’t may begin to feel the pressure to adapt. With digitization increasingly being driven by consumer demand and expectation, financial service providers that don’t integrate the consumer experience into their offerings will lose out to those that do.
  3. Affordable financial services: With so many new fintech players in the industry, competition and innovation continue to spur more efficient and affordable services for consumers. Old products will be replaced with new banks, payment options and wage access, and more will focus on credit care and access to cater to consumers.

Between Two FinTechs with Hunter Walk

By on September 2nd, 2020 in Industry Insights, Industry Interviews
Hunter Walk

In our second installment of “Between Two FinTechs,” an interview series with leaders in financial technology, we have Hunter Walk, co-founder and partner of seed stage venture fund Homebrew. Previously at YouTube and Google, Hunter uses his startup and scaling expertise to help founders articulate their product/market fit, recruit stellar teams and build well-defined cultures. In this conversation with our CEO Ohad Samet, Hunter shares how he started his venture fund, his thoughts on major developments in fintech and his investment philosophy.

This transcript was edited and condensed for clarity. You can see all the interviews here.

Ohad Samet: Hunter Walk is one of the early believers in our company and one of the most outspoken leaders in the venture capital community, so we’re really excited to have you, Hunter. Can you start us off by telling us about the beginnings of Homebrew?

Hunter Walk: Thanks so much for having me! 

Homebrew came out of a partnership with my co-founder. Satya Patel and I had worked together at Google  and always wanted to work together again. At the end of 2012, I was thinking about leaving Google after almost a decade, most recently having run the Product team at YouTube. Satya had recently left Twitter where he had been running Product, so we finally started to talk about what we wanted to do together.

“We didn’t assume we were relevant just because we’d been around the Valley for awhile and had the ability to write checks.”

We didn’t assume we were relevant just because we’d been around the Valley for awhile and had the ability to write checks. We wanted to make sure we were committing to a relatively small number of companies that we would get up every morning and put sweat and reputation behind them, not just capital. My objective is to be able to look back and think about the impact the people we backed made. 

We think about who we’re going to be proud to be associated with—and TrueAccord checks off those boxes.

OS: You recently tweeted that your team is “big on banking as a service.” Can you tell us more about how you’re thinking about that sector?

HW: When we started Homebrew in 2013, we believed industries would experience innovation from how data that used to be siloed can now be pooled. Data analysis that used to be impossible or expensive had become more open and available for companies of all sizes.

Despite having no specific background in financial services, we were fascinated by the potential there as a tremendously large industry where its consumers didn’t feel empowered by them. We realized there were people taking a very low net promoter score industry to create something that was thought of more positively by its customers. We knew there would be very tough challenges. It’s hard as a startup to navigate around regulations. The incumbents have spent a ton of lobbying dollars. Old technology platforms are difficult to work with, and you essentially have to figure out how to partner with them or route around them. But the people who could do it successfully would build incredibly durable, important, and valuable businesses.

We’ve invested in and continue to invest in that sector. It’s an industry where depth of knowledge will really help you in a lot of areas. We’re always happy to bet on first time entrepreneurs, but no entrepreneur should underestimate the complexity that you encounter in this sector. That type of knowledge, mentality and accrued experience, makes a competitive moat as well.

“[Fintech] is an industry where depth of knowledge will really help you in a lot of areas. We’re always happy to bet on first time entrepreneurs, but no entrepreneur should underestimate the complexity that you encounter in this sector. That type of knowledge, mentality and accrued experience, makes a competitive moat as well.”

We also look for that little crazy gleam in the founder’s eye that says “Oh, if we can do this, then we can do that.” I call those iceberg startups. The 10% that’s above the water looks impressive, but then you realize there’s another 90% below the surface.  Maybe the metaphor is that the ship is the incumbent, and the startup is the iceberg. And that’s utterly horrifying if you’re a ship. I don’t know what makes the investor. Maybe like a happy penguin on the iceberg!

OS: That’s a really interesting point. How do you feel about companies expanding into new businesses? How do you think about balancing the legacy business, expanding that, doubling down, and then working on value-added services as a way to expand the product?

HW: Sometimes people assume that as companies grow, they’re de-risking themselves. And I actually don’t think that’s true of the best startups. I think the best startups choose to re-risk their business at various milestones because they know that they have the opportunity to expand the set of services or products they offer against a consistent mission.

During my decade at Google, I saw that if you are a successful company, in the near term it is always worth putting more resources on your core business and not in new opportunities because you already know that the ROI will be positive. But the reality is that that’s actually the right time to start placing those next bets because you have the stability of something that’s working. And so you say, “Well, what does that put us in a position to do next?” Is expanding into this new service aligned with the mission? Is it consistent with the capabilities and brand of the company? And is it a big enough problem worth solving?

OS: What’s your take on “lending as a service” type companies?

HW: It’s a very interesting and obviously a tremendous area. There are definitely challenges for companies trying to break into that. I think some of those horizontal plays and those essential infrastructure plays are interesting, but you have to figure out how to run a very lean, tight ship because it’s only going to make sense if you can get to a certain scale. You need to decide what sort of risk you’re taking on, what sort of value you add, and if that value actually catalyzes the underlying business of your partners. But looking at the Affirm’s and so forth of the world, it’s clear that there are very smart people in this space who can get and preserve some margin because they’re doing something their partners probably can’t do for themselves, and increase revenue by taking on some of that processing risk. We think it’s one of those businesses where value is going to accrue to a very small number of players.

We’ve seen some other areas that we think are less competitive that are more emerging in the infrastructure space of banking, insurance pricing, and reinsurance. When it’s an area like this, I get really excited when I hear somebody with a contrarian take. If that person is right, they are going to potentially have an outsized result versus a bunch of people who are like, “Oh, I’m going to do Square credit for influencers, or I’m going to do credit for Patreon.” I don’t think those are, by themselves, interesting, discernible big businesses. They don’t have the same vision mission objective that, for example, TrueAccord does. Sometimes if you build the right platform, what other people are calling companies, you can call features and products.

“Sometimes if you build the right platform, what other people are calling companies, you can call features and products.”

OS: Can you tell us more about your investment philosophy and what’s next for Homebrew: How do you balance pattern recognition and Diversity & Inclusion when making early stage investments? 

HW: We believe it really starts by being accessible—we respond to every cold email, work to meet new people and communities that weren’t just based on our own work histories, and bring a ‘pay it forward’ attitude to working with underrepresented segments in tech. That said, there’s still plenty of work to be done—while we’ve historically invested in female-founded companies at a rate 4-5x the industry average, I don’t believe our portfolio is yet representative of our ambitions when it comes to other underrepresented segments such as Black founders. Hopefully I’ll update this a year from now and we’ll have more to say there!