Find out how Upwork partners with TrueAccord to resolve customer issues and retain lost relationships. Click here to read the case study


It’s time to use the best tools technology can provide to design winning collection strategies.


Ever wonder what the numbers really look like for digital debt collection? As it turns out, pretty good. Click here to read more.

Fintech Companies Are Learning to Work with Regulators

TrueAccord Blog

This article, written by our In House Counsel Adam Gottlieb, first appeared in the RMA Insights Magazine

The word “startup” conjures images of stereotypical open offices, complete with ping pong tables, standing desks, and people in hoodies feverishly hammering at keyboards. Startups are often associated with high risk, scrappiness, and the ability to break things and move fast–all a stark contrast to the bureaucratic and highly-regulated environment that most debt buyers and collectors operate in. Yet, as startups begin venturing into the area of financial technology, they have had to adjust to new operating principles and new stakeholders, with the government chief among them.

Startups have not always been sophisticated about interacting with regulators. When Uber started expanding city by city in the US, it often took an aggressive approach with commissioners, undermining their authority and operating defiantly in the face of cease and desist letters. In debt collection, as we’re all painfully aware, the FDCPA and TCPA, as well as an army of plaintiff’s attorneys, guarantee that such behavior won’t go unpunished. Indeed, new players in fintech have had to take legal and regulatory frameworks into consideration as a first order of business. For example, my company, TrueAccord, hired a lawyer as our first employee and focused on policies and procedures as much as it did on writing code while building  our business.

Understanding and embracing the importance of regulation and the impact it has on our business forced us to adjust our view on how to deal with regulators. In the early days of fintech, startups relied on external compliance counsel and sporadic engagements with the CFPB and other regulatory bodies. This model was driven mostly by lack of experience in supporting policy decisions on the part of startup founders and their venture capital backers. In the past few years, however, fintech startups have started engaging with regulators significantly more often.

Startup founders and funders have begun participating in the Consumer Advisory Board; investors and founders such as Max Levchin have been part of the Bureau’s panels for the past two years. Project Catalyst, the CFPB’s outreach program for innovative financial products and services, has had a steady flow of fintech participants in both its East Coast and West Coast offices. Startups have also learned how to support policy development processes: small business lenders developed a code of ethics for lending with cooperation from the Obama Administration. The fintech firm Plaid and similar providers led the discussion on making consumers’ bank account data accessible to third-party applications, and small balance lenders led the commenting period on the CFPB’s proposed rule. (Many RMA member companies participated in the CFPB’s SBREFA panel for the new proposed debt collection rules.) We’re seeing tangible change in the industry’s relationship with government and we do not expect that trend to change. If anything, it will increase if the Trump administration takes a more “pro-business” approach as expected.

It took fintech startups several years to mature and understand the value of engaging with government, but now that they do, they approach this engagement the way they approach any aspect of their business: with rigor and focus on delivering a message of innovation through technology. We expect these efforts to yield tremendous progress in rules and regulations in 2017 and 2018.

On American Banker: Real issue for debt collectors is the irrelevance of telephones

TrueAccord Blog

In a recent American Banker article, our team is saying: the regulatory discussion around phone calls in debt collection is rapidly becoming irrelevant for one very important reason: consumers don’t answer their phones.

In the past few years, the debate over limits on financial institutions’ electronic communications with consumers has focused on an outdated device: the telephone.

That is very well how the debate could continue under new leadership at the Federal Communications Commission, as industry supporters will likely urge the FCC to ease up on robo-calling restrictions.

To read more, click here.

It’s time to stop using commission-based compensation in collections

TrueAccord Blog

Many collection agencies and departments use commission-based compensation for their collection agents. This model is perceived as the only way to “make it” in collections: margins are slim to none, agencies themselves are compensated only for dollars collected, and commission-based compensation lets them hire cheap labor and have great performers rise to the top. In fact, this is a broken model, based on a flawed premise that only humans can collect from humans. It’s not only the Wells Fargo case that should alarm collectors and creditors who use them; it’s the conflict of interest that’s inherent to commissions in collections, and the legal and moral risks it introduces. With new technologies maturing and beating traditional call centers, it’s time to reconsider.

It’s not easy being a collector – commission or not

Even with commission payment, an average collector’s salary isn’t high. Coupled with a lower base, most collector job descriptions present no complex requirements. As a result, the average collector is an unskilled worker, sometimes with prior collections experience. These people are required to get on the phone, cold call hundreds of people, and get them to make a payment – a payment that determines the collector’s take home pay. It’s not uncommon for collectors to be debtors themselves. However you look at it, the industry is pitting low paid people against each other.

Subject to a stressful work environment, collectors are also expected to adhere to compliance guidelines or lose their job. But humans are fallible, deeply impacted by recent events. Debtors themselves can be very abusive. Collectors can be tired, jaded, or just worried about not making their numbers. These adverse conditions create the small, daily violations that lead to lawsuits and demand letters.

It’s time to stop using commission-based compensation

Moving away from commission-based compensation is a tough transition, but it’s possible. It requires a change in mindset, and upfront investment. At TrueAccord, we built our small service team to be expert operators of a highly automated system. The team is compensated with a reasonable salary, sets a higher hiring bar, and handles more than 40,000 cases per agent. We reach these numbers thanks to our machine learning based engine, Heartbeat, and a team of engineers and data scientists focused on process and decision automation.

Eliminating commission-based compensation is incredibly important. Sophisticated creditors who control all facets of their vendors’ business should demand that from their collection agency partners. No amount of scripting and quality assurance can compensate for the impossible situation those collectors have to deal with. It’s only investment in technology and scale, and high quality of service teams, that can hit collection goals while improving consumers’ perception of the collection process.

Why batch-sending emails aren’t all there is for debt collection

TrueAccord Blog

Though historically resistant to innovation, the collection industry feels pressured to make changes. Consumer preference, requirements from clients and mounting costs dictate increased use of technology – a welcome trend. Among those new tools, we are starting to see increasing adoption of emails for collections. Agencies have a small selection of vendors to blast out an email. Agencies with large call centers view this as a cost reduction exercise, and another way to get consumers to call in and talk to their agents.

We think differently about emails at TrueAccord. Since we built a machine learning based, integrated multi-channel system, our use of emails is very different than the rest of the industry. We see huge potential in emails, significantly beyond a collection letter’s cheaper cousin. Here are three ways we use email differently.

Targeted emails

Our system personalizes every phone call, letter, text or email. Emails, in particular, give us an incredible set of personalization tools. While we stick to FDCPA hours when sending proactive emails, we also control the day and time we send each email – to the minute – in order to increase response rates (our emails are regularly opened by 15-20% of consumers, with 1.5-2% click rates). Since every consumer gets their own email, we can personalize their content to their specific situation. The system knows whether they made a payment, recently broke a promise, or are staying in constant contact. Targeted emails increase response rates and eventually liquidation.

Real time activity data

Each email contains links that allow consumers to respond to our communication, from making a payment to submitting a dispute. Our system tracks consumer behavior in real time – the emails they opened, the links they clicked, and the pages they visited on our website. It then uses this data, in real time, to continue personalizing the experience so consumers can find what they need to make a payment.

Cross channel integration

Adding a batch email service to an already established call center creates a data integration hell. It can be challenging to let an agent know that the consumer they are talking to just received an email. Since the TrueAccord system was build with integration in mind, emails are integrated with all other channels. The system can trigger a phone call if a consumer’s response to our email matches a certain pattern, and the agent will have all activity data available to them while on the call. It can decide to follow up with a text message instead of another email or call, harvesting the added engagement thanks to alternating channels. Alternating effectively between channels means that the system doesn’t need to blast consumers with contacts. It contacts consumers an average of three times per week, rather than several times per day. This almost eliminates consumer complaints and legal risk, and improves consumer satisfaction.

Bottom line

Technology has a lot to offer to creditors and collectors. We’re seeing great returns from using digital – and other – channels in an integrated, machine learning-based system. Our clients see that upside too: in head to head testing, our system beats traditional collection services by 30% and more.

Self service portal vs. machine learning-based collections

TrueAccord Blog

Consumer behavior is changing. As more of us are glued to our mobile phones, emails, and social media accounts, it’s clear that the old ways of collecting debt are quickly becoming irrelevant. Still, the market doesn’t offer a multitude of collection solutions aimed at responding to the digital consumer. When we present our machine learning-based solution to prospective customers, we’re often asked about the difference between our solution and a self service portal. Although both solutions are digital, they cannot be less alike.

Passive or active? Proactive and reactive strategies in collections

A self service portal is a passive asset, available for consumers to use when they choose to. Often, consumers choose not to use the portal since they would rather not deal with their debt conundrum. It’s only human to do so. Since the portal is passive, the consumers who find it are those who look for a way to pay online, without talking to an agent. They are a minority, and their liquidation is far from worth the price of implementation. In fact, many or the collectors and creditors who use online portals have accepted that less than 10% of their paid dollars may come from their self service portal. Others have given up completely. Compare that with TrueAccord’s whopping >90% paid through our online portal.

A machine learning-based system is an active one. Our collection engine creates collection strategies that are both proactive and reactive. The system proactively reaches out to the customer, automatically and using pre-written content, across multiple channels, to get them to engage online. Every communication has a link to the online and mobile-optimized portal, and phone calls are aimed at supporting this strategy rather than the only tool for contacting the consumer. Once the consumer interacts with our communication and browses the website, the system tracks their behavior so it can react to it – personalizing follow up flows based on emails they opened, pages they visited or words they said to agents on the phone.

Cross channel integration and halo effect

Using a machine learning based collection system has another advantage over passive a self service portal: it is integrated across all channels. Self service portals are often an add-on, their data is separate from the main collection system and dialer. They exist to supplement the main dialing strategy, often giving consumers the feeling that they are “fleeing” the collectors to use the online portal. It’s a wasteful strategy that also yields consumer complaints.

A machine learning based system harvests the halo effect, that causes consumers to react better when they are contacted across multiple channels. For example, for some groups, following up on an email with a single call attempt at the right time and number is twice as effective in getting a response as sending another email. For others, calling within five minutes of a consumer browsing through payment options without paying increases liquidation significantly. Shifting between channels increases effectiveness but also increases efficiency, reducing outbound call volume by up to 95%.

Bottom line

Machine learning based solutions are significantly more effective than a passive, stand alone self service portal. More than 90% of paying accounts in the TrueAccord system are resolved using the online service – and liquidation beats traditional agency performance by 30% and more. Using data and the maturing world of machine learning algorithms is the future of debt collection – and we’re happy to help.


Debt collection and President Trump: not much will change

TrueAccord Blog

We’ve heard varying sentiments about the November 8th election results. Behind the scenes, many in the debt collection industry are excited and happy for them. They believe a Trump presidency will put an end to regulation in debt collection, and put the industry “back in business”. This is a short sighted view, focused on the wrong drivers of change for the industry. Debt collection and President Trump may not be the great allies some believe they will be.

No administration can side with debt collectors

First, to put the industry back in business, debt collectors’ well being has to be on the new administration’s mind. Doing so will put it at odds with consumer advocates across the nation. It isn’t just about complying; the industry isn’t measured by its average, law abiding debt collector but by the most horrendous abuse stories one can dig up – and digging those up is still too easy. On the list of battles to take and industries to fight for, debt collection will easily take a back seat.

Deregulation is a rocky road

Second, undoing regulatory impact on the debt collection industry is a complex process. It will require not only dismantling the CFPB and halting all regulatory and supervisory activity, but also reversing the FCC’s TCPA ruling. While handing the FCC ruling might be doable, assuming public sentiment is amenable, it will take a while to implement. The CFPB is much trickier: as the CFPB is asking for a rehearing in the PHH decision, it is unclear whether Trump will be able to impact the identity of the head of the agency until 2018. This means that the debt collection rule will materialize – not the least since debt collectors themselves want clarifications regarding using technology in debt collection. Even if all of the above happens without any roadblocks, CFPB supervisory activity won’t go away; consumer protection is an important goal for every administration.

Compliance isn’t the most important factor

Finally, although regulation gets all the attention, it is far from the most impactful factor in the future of debt collectors. No regulation will reverse the shift in consumer behavior. Consumers will keep disregarding phone calls and letters. They will continue preferring online and self-service portals. Their behavior will continue to shift away from the industry’s standard mode of operation, calls and letters. It is this reality that creditors and collectors must grapple with, instead of fixating on speculation about the future of the CFPB. It’s a generational shift like no other, and it is stronger than any government agency or wishful thinking. Ignore it at your own peril.

The CFPB’s proposal outline and SBREFA panel

TrueAccord Blog

The CFPB’s proposal outline and SBREFA panel

Last week, TrueAccord participated in the SBREFA panel for the CFPB’s proposal outline for upcoming debt collection rule. The CFPB invited Small Entity Representatives (SERs) to discuss how the outline could influence their businesses. The industry expects a more fleshed out proposal quite early in 2017. One thing is clear: this rule will change the debt collection industry forever. Creditors, collectors and buyers should take note and start adapting to, rather than fighting the rule.

While this isn’t the final proposal, we can observe hints of the huge changes to come; it’s such a departure from current practices that applying this proposal retroactively may erase the majority of the debt buying industry. We don’t believe this is what the CFPB is aiming for. We see true desire to change operating principles in the debt collection and buying space, while showing a path forward. The outline included explicit references to new technologies, and some discussion of proper use of email. It also signaled the CFPB’s intent to provide safe harbor where it can, promoting best practices in the process. You can read our initial response here.

How should the industry respond to the CFPB’s proposal outline?

The industry’s responses to the outline have been mixed. While some SERs came to the panel prepared to discuss key issues (with tremendous help from the Debt Buyers Association), some focused on dissenting or simply pleading with the CFPB. However the time to dissent has passed. The outline’s broad strokes won’t change. These are our top suggestions for dealing with the coming changes:

  1.     Collectors must prepare for a world with almost no phone calls. Between the FCC’s TCPA ruling and the CFPB’s proposed rule, calling en masse is going away. The CFPB could issue a hard limit on calls or simply significantly increase litigation risk, by defining more than 6 calls a week as harassment. Either way, collectors must start adopting better data science for call prioritization and moving to alternative channels like email. There will be a significant reduction in the number of Right Party Contacts as the industry currently defines the term.We discussed in the past how using an integrated, multi channel approach can match and exceed current collection rates.
  2.     Collectors must prepare for a fundamental change in consumer interactions. One of the SERs noted that “[collection companies’ role] is to get the consumer on the phone.” The CFPB is changing that by mandating more data requirements, easier disputes, and improved consumer understanding initiatives. Clearly, collectors’ role is shifting from a glorified call center to a sophisticated service that guides consumers through repaying their debt, with more flexible payment options and much more information exchange. This model won’t support large call centers making millions of calls and commission based compensation.
  3.     Creditors must prepare for changes to their first party operations, while also changing the way they provide data to their agencies. Data integrity will become an even bigger issue when working with collectors, and old systems may not be a fit anymore. Using eDisputes, collecting feedback from consumers and making account data easily available in collections all require big changes – but will result in a leaner and better collection funnel.

Bottom line

We see early adopters already thinking ahead about these changes. Our clients work with us to adopt advanced servicing models for consumers, better data availability and flexible options across multiple channels. Still, many are behind, refusing to adopt new technologies or experiment with better customer care in the debt collection process. Clearly, the CFPB is ushering change and is not shy about it. It’s time to adopt before a new rule comes into effect.

Want to learn more about TrueAccord’s perspective and how we can help you adapt to this new world? Get in touch with our team!

It’s lonely in the Debt Collection Startups box…

TrueAccord Blog

The Startup culture has always been characterized by herd-style behavior.  There is a tendency to focus on a bunch of areas that are “ripe for disruption”. After a promising / well-publicized startup draws attention to a area – be it ride-sharing, marketplace lending, payments processing, risk management, or one of many others – many more rush in, attempt to differentiate themselves and get a piece of the action.  

Call me a skeptic – but when I see new entrants rushing into an already crowded niche, their reason for being there (Differentiated value prop? Superior talent? Can’t come up with a new idea, and investors are giving out free money here?) is rarely obvious.

There is one industry I can think of that has been aching for innovation, and yet has seen next to no startup activity.  This industry

  • Touches ~80 million Americans a year, in a way that is highly inconvenient, even disturbing
  • Makes little-to-no use of digital communication
  • Often burdens consumers with hefty service fees
  • Is responsible for more consumer complaints to the Federal Trade Commission than any other

This industry offers an experience that many go to great lengths to avoid – and yet, because consumers have no voice in the selection of the “service provider” they deal with, customer experience is frankly not a factor industry players optimize for.  The only party looking out for the consumers’ experience in this ecosystem are the regulators, who have recently proposed new rules that will improve customer experience – and, in doing so, may endanger the livelihood of the traditional service providers.  Do I have you on the edge of your seats yet? The industry is Debt Collection.

If this industry isn’t begging for innovation through usage of technology and analytics to interface with consumers in a more friendly, convenient, compliant, and effective way, what is?  And yet, in the infographic CB insights published last week (see below) which shows startups bringing AI / Machine Learning to Fintech, the Debt Collection box is not crowded at all – in fact, TrueAccord is the only player in it.  


This is not totally a mystery to us.  Debt Collection is not a “sexy” space.  The barriers to entry are also significant – it has taken us over two years to become fully licensed (as most States have separate licensing processes and requirements), and procedural Compliance requirements are complex and State-specific as well.  What makes it all worth the hard work is the opportunity to make a difference for tens of millions of people, many of whom don’t know where their next rent payment will come from, who are desperately struggling to attain financial stability, and can use a service provider who is on their side and is looking to make the experience less difficult for them.  

We are proud of making significant headway in a space few other startups have ventured into.  Over the past three years, through a massive investment of Data Science, Analytics, and Engineering talent, access to millions of records of data, and multiple iterative optimization efforts, we have built an intelligent, automated, highly scalable Collections engine.  We are excited to hear consumers tell us “We’ve never worked with a friendly collections agency before – where did you come from?”.  And we are overjoyed to work with over 100 corporate clients, including several large financial institutions, that care about treating their customers (even former customers) well and are excited about the recoveries we bring (compliantly) to the table.

Will other startups join us in the Debt Collection box? If they do, we are ready – with our 3-year first-mover advantage and a product-market fit that took several years to find and build for, we are uniquely positioned to continue driving innovation, taking share in this market, and making Debt Collection a less unpleasant experience for millions of people.  

New white paper: code driven compliance keeps you safe

code driven compliance keeps you safe

Compliance is top of mind for the debt collection industry. Highly regulated at the State and Federal levels, collectors are subject to dozens of laws and regulations that govern every aspect of their operations. A highly litigious culture based on strict liability laws means a constant threat of lawsuits, resulting in shifts in courts’ interpretations of various statutes. To pile on, debt collectors are subject to active enforcement and rulemaking activity and attention by lawmakers, leading to ongoing updates in debt collection laws. What can debt collectors do to get ahead of them curve? At TrueAccord, we know code driven compliance is the answer.

While compliance pressure mounts, the industry hasn’t changed its traditional operating model. Hundreds and thousands of human operators use dialers to continually ring up those in debt. They spend hundreds of hours discussing sensitive issues with customers, and are oen compensated with a commission on debt repayments. This model has survived TCPA rulings, enforcement actions, class actions and dramatically soaring legal and compliance costs. Its combination with a rapidly changing regulatory environment is a challenge that many lenders and collectors are struggling with. Compliance officers at these companies are trying to solve an extremely hard optimization problem: how to design and implement a control structure that effectively detects and mitigates compliance exposure, while optimizing on compliance resource allocation and exposure.

Code driven compliance: a fundamental change in compliance management

In this white paper, we review a code-first approach to compliance. Developed as part of a machine learning-based alternative to debt collection via large call centers, it solves the major pain points the industry is facing with regulators and legal experts. We discuss how this model works for TrueAccord, a machine learning based collection service, and for its clients. If you’d like to learn more about our service, check out our website.

To read more, download the free white paper here.