When it comes to New Year’s resolutions, improving personal finances isn’t anything new. But as we look ahead to 2023, we see more and more Americans adding serious financial goals to their list. A recent Ascent survey found 66% of Americans plan on making a financial resolution.
And your business should be paying attention to the New Year goals of consumers: it’s the ideal time to support your customers to pay off debt (one of the most common financial resolutions for 2023) by meeting them where they are—with the right message, right channel, and right time.
Let’s take a look at why now is one of the best times to start engaging with consumers in a more flexible way to recover more in 2023.
Financial Resolutions Rise, Along with Delinquency Rates
As we mentioned above, financial resolutions aren’t new, but the number of Americans making them is rising (which might have something to do with rising delinquency rates). For 2022, it is estimated that more than 92 million Americans made financial new year’s resolutions, compared to only 60 million who reported making a financial resolution in 2021. And surveys found that 41% of respondents expressed a strong desire to prioritize paying down debt in 2022—a trend that will continue into 2023 for good reason.
For six consecutive months there have been increases in the 30+ days past due delinquency rates, with those accounts showing a 3.28% increase month over month in October, according to Experian’s November Ascend Market Insights. Looking ahead, TransUnion predicts delinquency rates could rise to 2.6% at the end of 2023 from 2.1% by year-end, which would represent a 20.3% year-over-year increase in delinquent accounts if the projections prove accurate.
Regardless of consumers’ personal financial goals, these delinquency rates and predicted trends are a sign that if you’re not already tailoring your collections communications to today’s consumer preferences, then a better engagement strategy needs to be your organization’s resolution for 2023.
New Year, New You, New Collection Strategy
Meeting consumer preferences is about more than just boosting your bottom line (although that is a bonus)—showing empathy as delinquencies continue to rise can help retain customers even during their often stressful experience of being in debt. An early December survey from U.S. News & World Report shows that 81.6% of Americans who have credit card debt are experiencing anywhere from a little to a lot of anxiety about it. Among respondents to the Ascent survey who plan to make financial New Year’s resolutions for 2023, only 20% are optimistic about keeping them, with 63% predicting it’ll be too expensive to do so.
Help your customers keep their resolutions by making it easier for them to engage on their own terms with the right message through the right channel at the right time, and recover more in 2023.
Let’s look at how to do it:
Right Message As all these recent surveys have shown, consumers are literally telling us that they want to pay down debt in the new year. But treating them in a one-size-fits-all approach can fall flat when trying to engage an individual, especially when it comes to sensitive financial situations or delinquent accounts. In fact, 72% of consumers say they only engage with personalized communications, so don’t miss the opportunity to communicate in a way that resonates with them. Learn more in our Buyer’s Guide to Digitally Engage Your Past-Due Customers here»
Right Channel Engage with consumers through their preferred channels, whether it’s by email, SMS, or traditional calling. Research shows that 46% of consumers already expect to communicate through preferred channels. By using advanced machine learning (like TrueAccord’s patented decision engine, HeartBeat), your business can identify the ideal way to reach the customer and pivot in realtime based on reactions or engagements. Learn more about how to Elevate Your Collection Strategy with Machine Learning and HeartBeat here»
Right Time Minimize unnecessary communication efforts and reach consumers at a productive time—which can be easier said than done if your business is still relying solely on call-and-collect methods. To meet compliance regulations, the FDCPA prohibits communication through any channel at known inconvenient times for consumers, presumed to be inconvenient between 8AM to 9PM, but often customers choose to pay their bills and resolve their accounts outside the presumptively inconvenient hours as long as they can access online account portals that allow them to see account information and take actions to resolve their account. Learn more about it in our State of Compliance & Collections report here»
When most people think of debt collection, the word “empathy” rarely comes to mind. As a mission-driven company, we at TrueAccord, are trying to change that. We know life happens and financial anxiety has become more common than ever—especially when it comes to dealing with debt. By understanding and anticipating a customer’s needs, TrueAccord takes an empathetic approach which enables us to tailor our message and help the consumer’s journey back to financial health. With this in mind, it’s crucial for us to understand how a consumer might feel when they fall into debt.
Understanding and Engaging with the Customer
Life happens and so do delinquencies. So far, most fintechs have been good at focusing on customer experience by investing in user research and making sure that their products resonate with their target audience. However, a customer’s situation can change at the drop of a hat and with it their financial status, priorities, and motivations. When a customer, whom you thought you knew well, has an account that goes delinquent, they essentially become a stranger. Now a whole new approach is required in order to engage with this consumer.
In order to adopt the right approach to engage a delinquent account, the first thing we have to figure out is who the customer is. What are their needs? What problems do they have? Do they have special circumstances? Not only is every customer different, but every interaction you may have with that customer could be different depending on what life situation they find themselves in. So it is very important to have a broad communication strategy and be ready to meet the customer when and where they are ready to engage. This means don’t limit communication channels and have options that consumers can explore, evaluate, and select on their own time.
Leveraging Digital-First Channels
Most consumers prefer using digital channels over talking on the phone with research showing 94% of unidentified calls going unanswered. Digital channels allow people to choose when to respond without being put on the spot.
But starting a digital-first approach is not easy—it’s not just about sending emails or SMS messages to consumers. At TrueAccord we try to find the right communication channel to use for a specific consumer. We might start with a combination of email and SMS but once we get more engagement with one or the other, we’ll primarily focus on using the channel the customer engaged in.
We make sure that they’re aware of their debt and their options from obtaining more information, disputing, or evaluating payment plans all through a portal where the consumer is in control..
For consumers who do choose to set up a payment plan, we work to make sure that they have everything they need to be successful in their plan – whether that means changing the plan, the payment date, or amount, we monitor and provide content so that the consumer can effectively stay in control of their plan through successful completion – putting the consumer back in control of their own financial health while at the same time recovering for the creditor.
Using Data for a Personalized, Empathetic Experience
To truly engage consumers a successful digital strategy should go beyond a simple campaign that pushes out emails to all of your consumers at the same time every week or every other week with a generic message. Not only do you have to overcome the inboxing challenge to avoid spam filters, you need to deliver the communication at the optimal time for the consumer to open the message. And you have to have the right message, a personalized message that causes the consumer to act – to communicate back to you their intentions related to the account (dispute, full payment, payment plan, hardship, etc.).
But how do you personalize?
This is where it’s vital to leverage an understanding of your consumers. This can be done with experimentation in A/B testing consumer research, and machine learning. A/B testing and consumer research help identify what resonates with consumers and what does not. Machine learning allows personalization at scale. At TrueAccord, we rely on machine learning to continuously improve our models. We can see what digital channels, timing, and messaging each individual consumer responds best to and tailor those specific preferences to the individual journey for each consumer. We also make sure that compliance is included from the start as it needs to be regulated throughout.
For example, the best payment option is different for everyone. We provide a lot of flexibility, but we also know that showing them that flexibility up front, something that they can actually afford, will engage the customer to take the next step. Depending on the size and the age of the debt, we may show a couple of payment plans that we believe will be the most attractive to that customer along with the option to build their own payment plan. Once a customer sets up their payment plan, we send reminders when payment is due. We also have models that predict if a consumer is likely to break their payment plan based on past behavior and offer options to help keep them on track, like pushing the payment if they’re unable to pay on that date (because we understand that life happens, just like delinquencies). And as they make their payments, we celebrate their progress with them and acknowledge that they are making an effort to improve their financial situation!
TrueAccord has worked with over 20 million consumers and sends over one million communications per day. For each of those communications, we’re making decisions on what to send, how to send it, and when to send it all in accordance with the legal and regulatory compliance obligations. We then use that data to continuously optimize and improve our communication method for each consumer. We’ve learned that if you’re building for the downtimes, it’s critical to realize that debt collection is a part of a consumer financial service. While our creditors are our clients, if we do what is right for the consumer (our clients’ customers), they are more likely to pay back to those creditors. A better consumer experience leads to better outcomes for all.
By incorporating an empathetic approach to debt collections, TrueAccord is able to collect more money while helping consumers with their financial situation.
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.
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.
What is your core business? It probably isn’t chasing down delinquent accounts—and it shouldn’t be. Attention, resources, and bandwidth should be dedicated to what drives revenue and pushes your company’s goals forward.
But delinquencies are a reality for any business that handles payments. And when a customer misses a payment on the due date, you shouldn’t let their delinquency slide for too long, otherwise before you know it, that delinquent account will eventually get charged off and considered a loss.
While charge offs aren’t completely unavoidable, ineffective recovery efforts on those defaulted, post-charge off accounts (typically handled by a third-party partner) are completely avoidable. Effective pre-charge off (also known as first-party) collection efforts are just as important as well. For today’s consumers, that means engaging with them in more innovative ways outside the traditional call-and-collect methods and moving into a more digital approach.
But without a consumer-centric strategy for both pre- and post-charge off accounts, digital outreach can stumble just as easily as an inexperienced call center rep on their first day—ineffective or even damaging to customer relations.
So what do effective strategies look like for first-party and for third-party debt collection? Let’s first take a look at the nuances to consider between first-party and third-party collections.
First-Party vs Third-Party Collections—What’s the Difference?
First-Party First-party refers to using the creditor’s brand in customer communications. The focus is on remediation of newly delinquent accounts and getting the customer back on track. The communications address the part of the loan that is late, which is often not the whole amount, and refer the customers back to the creditor’s call center, payment portal, or online account system.
Third-Party Third-party refers to outsourcing collections through a third-party partner on the entire balance of the account. At this point, many creditors believe the customer relationship has been lost—but this does not have to be the case with the right digital strategy!
First or Third—Customer Engagement is Key to a Homerun in Collections For both first- and third-party collections, success hangs on reaching each customer with the right message, through the right channel at the right time. This can be no small feat for smaller in-house teams attempting to recoup pre-charge off debts. And how can you trust that your third-party partner is actually engaging with customers in the best way possible?
So Who’s on First and Who’s on Third for Your Debt Collection?
It may seem like a silly question: who is on top of your first-party, early delinquency collection communications? Many companies assume that they must handle pre-charge off collection efforts completely by themselves or by outsourcing with a first-party company, but there are communication alternatives such as TrueAccord’s Retain. Retain is the client-branded pre-charge off digital engagement product, directing customers back to you enabling your customers to choose the right time, place and channel to contact you. Improve your cash flow, reducing losses and allowing you to spend more time and energy on core business objectives.
While third-party, post-charge off collections may feel more “out of sight, out of mind” than first-party since organizations outsource to third-party vendors, it’s still crucial to have a comprehensive digital communication strategy that aligns with individual business standards. TrueAccord goes above and beyond with Recover, our late-stage collection solution that proves digital-first delivers: 96% of consumers who resolve with Recover do so using only self-serve digital tools.
TrueAccord’s mission to help organizations recover more (from happier consumers) is comprehensive for both first-party, pre-charge off and third-party, post-charge off, whether using one or both intelligent digital-first solutions together.
The Consumer Financial Protection Bureau (CFPB) quietly published on its website additional frequently asked questions (FAQs) on the Debt Collection Rule (i.e. Regulation F) relating to electronic communications and communicating during unusual or inconvenient times or places.
The FAQ answers multiple questions, ranging from “is a debt collector required to honor a consumer’s request to opt out of electronic communications if the request does not conform to the debt collector’s opt-out instructions?” to “does an automatically generated electronic communication (such as a payment confirmation) sent at a time the debt collector knows or should know is inconvenient to the consumer, which is sent in response to a consumer action (such as a payment), meet the limited exception for responding to consumer-initiated contact?”
While many of the responses to the FAQs can be found in the Official Interpretation section of Regulation F, there are some points worth highlighting:
A consumer is not required to use the debt collector’s preferred or stated opt-out method. This means, for example, an email opt-out can come from a non-email channel, an SMS opt-out can from a non-SMS channel, etc.
A consumer does not need to use specific terms contained in a debt collector’s opt-out instructions in order for their opt out to be effective. For example, if the instructions tell a consumer to reply with “stop” to opt-out, and the consumer replies with “quit” instead of “stop,” the debt collector must still honor that opt-out.
Email addresses and mobile telephone numbers are not necessarily associated with a “place.” This means that the prohibition on communicating or attempting to communicate at unusual or inconvenient places does not prohibit a debt collector from communicating or attempting to communicate with a consumer through email or mobile phone. However, if the debt collector knows, or should know, that the consumer is at an unusual or inconvenient place, then the prohibition still kicks in.
What should creditors look for in their debt collection partners?
Creditors should check to see if their debt collection agencies train their staff and design their processes so that they promptly and effectively identify and process opt-out requests. Since opt-out requests can come in various forms and fashions, debt collectors need dynamic procedures to capture any and all opt-outs. Debt collection agencies also need processes and technologies to help them implement controls for inconvenient time and place restrictions – which may be a little tricky when applied to email and mobile phone numbers.
What is TrueAccord’s take?
At TrueAccord, our goal is to make the debt collection experience friendly and easy for consumers. That is why we engage consumers on their preferred communication channels and make it easy to opt-out of electronic communications. We take a broad approach to honoring a consumer’s opt-out request no matter how we get it or what specific words they use.
While the new FAQs clarified that the Debt Collection Rule does not require debt collectors to communicate electronically with consumers, we pose this question back:
If a consumer reaches out to you electronically, why wouldn’t you want to communicate with them on the channel they prefer?
TrueAccord is an intelligent, digital-first collection and recovery company that uses the industry’s only adaptive intelligence: a patented machine learning engine, powered by engagement data from over 16 million consumer journeys, that dynamically personalizes every facet of the consumer experience in real-time. Our team takes innovation seriously and works tirelessly to provide product and service features that deliver outstanding results for clients and customers. Here’s what’s new from TrueAccord.
Feature Update: Web Chat
Tax season is upon us and in the debt collection industry that means consumers have access to refunds. According to the National Retail Federation, of the 59% of consumers who are expecting a tax refund this year, 33% plan to spend their refund on paying down debt. For this reason, mid-February through May is considered the most productive time of the year for debt collection with many consumers receiving tax refund money and opting to use this extra cash to catch up on their finances. During tax season, it is important to manage the large volume of inbound requests while also maintaining the quality of customer interactions.
As a digital-first company, TrueAccord invests heavily in strategic communication with consumers where and when they want it and doesn’t rely on a large call center operation. With an expected increase in inbound communications during tax season, the TrueAccord team determined that a digital-first live chat feature would align with customer contact preferences and enable better customer service during peak times.
To solve for this, TrueAccord launched a custom web chat interface in advance of tax season, which is visible to customers as a chat “bubble” on the consumer-facing web pages. The solution offers myriad benefits to both customers and customer service agents including reducing call volume, improving agent capacity to handle multiple consumers, assisting in managing tax season volume and providing a consumer-friendly self-service option for most commonly asked questions.
We’ll monitor and analyze how the new web chat feature performs during this year’s tax season, but consumer surveys have shown that web chat is preferred by 41% of consumers over phone, email and social media support, so we anticipate high customer utilization. The expected outcomes of web chat implementation for tax season are:
Improved user experience by offering a preferred method of communication
Reduced in in-bound call volume
Increased accounts closed rate
Managed tax season volume and
Improved quality service levels across all operations communication channels with self service options for most commonly asked questions and inquiries now via web chat
Banks are accelerating their adoption of new digital debt collection tools in anticipation of a “tidal wave of consumer debt issues” when government stimulus programs end and financial institutions stop offering forbearance and loan deferral options.
That’s the premise of a new article in American Banker highlighting a variety of technology-powered strategies banks are using to make debt resolution more automated, conversational, and empathetic. These approaches range from the convenient (more flexible self-service payment options) to the high-tech (robotic process automation).
The American Banker article highlights promising signs of progress, particularly for industry players that have not always been known for digital adoption. KeyBank, for example, is in the process of rolling out a self-service digital payment portal designed to offer banking customers privacy and flexibility in resolving payments. And Alabama-based Regions is implementing digital messaging and intelligent interactive voice response (IVR).
At the same time, the article shines a light on the massive challenges facing any financial institution looking to implement intelligent digital debt collection at scale. Here are three common hurdles on the path to digital debt collection maturity – and why they matter:
Challenge #1: “One-size-fits-all” approaches
The challenge: In its overview of Regions, the article makes reference to a single conciliatory messaging tone used in all outreach to delinquent customers.
Why it matters: Consumers differ vastly in their preferences and responsiveness to digital touchpoints. For example, one consumer might respond to a friendly message delivered by SMS, while another might respond best to a straightforward message delivered by email. As a result, a one-size fits all approach falls short of realizing the potential – in both performance uplift and customer experience – of true one-to-one personalization.
The TrueAccord approach:HeartBeat, TrueAccord’s patented machine learning platform, mines through tens of millions of data points to optimize digital outreach on the individual level within a programmed set of compliance rules – and continues learning the more data it analyzes.
Challenge #2: Narrow, channel-specific use of machine learning
The challenge: Another challenge that banks face in scaling their use of intelligence – including artificial intelligence (AI) – is the limited deployment of algorithms and optimization within a single kind of channel, such as in a call center environment. The article profiles a collections and business process outsourcing company, for example, that developed an AI-based virtual assistant that can handle most inbound phone calls.
Why it matters: Machine learning and artificial intelligence (AI) are powerful tools for restoring intimacy and relevance to customer relationships at scale. At their most useful, these tools should be deployed to personalize the customer’s full experience with a bank – not just the limited interaction on one channel.
TrueAccord’s Approach: HeartBeat captures a continuous data feedback loop and optimizes for each customer touchpoint across a variety of digital channels, ensuring that each customer is being reached on the channel that is most relevant for her.
Challenge #3: Building a truly comprehensive and flexible self-serve portal
The challenge: Constructing a digital portal that drives consumer adoption and usage takes major work. To truly match the convenience of online banking, digital tools must also allow consumers to adjust the length and installment amount on a payment plan, defer a payment, dispute all or a portion of their debt, apply for a hardship pause on their debt, and much more.
Why it matters: Research suggests that customers want to be able to self-serve. But doing so requires the full, flexible range of interaction options that would be available to them through traditional analog channels.
TrueAccord’s Approach: Through a robust and flexible digital platform, TrueAccord offers a best-in-class self-serve experience: over 95% of users resolve their accounts without ever directly communicating with an agent.
Ultimately, digital debt collection technologies offer banks the ability to build lasting relationships with their customers. As Kimberly Snipes, consumer chief information officer at KeyBank puts it in the American Banker article: “We want our customers to say, I hate that I had that situation, but I felt like my bank was working with me, not against me.”
Being aware of the challenges on the path to digital debt collection – and having a plan in place to address them proactively – can help financial institutions ensure that they’re set up for long-term success.
TrueAccord is reinventing the relationship between creditors and lenders with a machine learning-driven, digital approach to debt collection. Our technology personalizes outreach to each customer across digital channels, continuously optimizing for performance while delivering a customer experience that builds long-term brand loyalty. Schedule a demo today to learn more.
The collections industry continues to expand its digital footprint as growing consumer preference for digital channels combines with stricter regulations on call volume and call rates. Digital communications are standard today, but a key law passed in 2014 by the New York State Department of Financial Services of New York limits third-party collectors’ abilities to connect with consumers via email.
We’ve seen the impact that digital communications can have on people’s lives, and you can help your fellow New Yorkers by sending the governor and your local official an email using the template at the end of this article!
The law (23 NYCRR 1)
Many existing collections laws are rooted in the Fair Debt Collection Practices Act (FDCPA) from 1977, long before emailing, text messaging, and direct voicemail technologies existed. In an age of growing prefernece for digital communication, New York’s 2015 law—§ 1.6 of 23 NYCRR 1—states that collectors may only contact consumers via email if they have:
Voluntarily provided an electronic mail account to the debt collector which the consumer has affirmed is not an electronic mail account furnished or owned by the consumer’s employer; and
Consented in writing to receive electronic mail correspondence from the debt collector in reference to a specific debt. A consumer’s electronic signature constitutes written consent under this section.
Shortly after the law took effect the New York Department of Financial Services compiled a list of answers to frequently asked questions. You can review them here.
These laws were put in place to protect consumers from collectors excessively emailing them, but consumers are not required to opt-in for debt collectors trying to call them on the phone. In the State of Collections 2019 report published by TransUnion and Aite Group, one collections industry leader said that “right-party contact has fallen off a cliff,” and for many debt collectors, this means that their existing call-based strategy is suddenly becoming unviable.
On the other hand, we’ve found that consumers provide their email address opting into electronic communications with their creditors. In fact, 95% of accounts placed with TrueAccord come with an email address provided with the placement file. Of those we reach with our digital-first strategy, 65% of them open at least one email, and 35% click at least one link to begin the process of repayment.
When debts go unpaid, some creditors and collectors turn to legal action, and New York is suffering a resurgence of lawsuits since the passage of the 2015 debt collection law. In fact, 2017 saw a 61% increase in debt collection suits according to the New York State Unified Court System. In other states across the country, TrueAccord has seen dramatic growth in consumer debt repayment using email and other digital channels as the primary mode of communication.
At TrueAccord up to 96% of accounts are resolved without speaking to an agent and nearly one-third of users prefer to manage their accounts outside of the “presumptively convenient” hours (8 am to 9 pm) legally outlined by the Fair Debt Collection Practices Act.
Consumers understand the ease of this digital management system and regularly share their positive experiences with a digital-oriented collection strategy. Here are a few:
I liked that the email system was used rather than phone calls. I found it easy to use, and it helped me to gather information, figure out a plan, and get the bill paid. It was a small balance, but during this time, it seemed bigger to me. Thank you for your service.
This was the best way for me to take care of my outstanding debts since I’m always on the road. Thank you for taking your time with me and not blowing up my phone!
TrueAccord has been friendly and helpful, and your systems are always up and running for me to use. You should be proud!
The power of digital communication
Digital channels give people the power to access and manage their debts on their own time without having to work directly with call-center agents. Moreover, it provides greater consumer protection by providing a paper trail of debt communications, unlike aggressive phone calls that consumers most likely wouldn’t be able to record. The more hassle-free options that folks have to pay, the more likely they are to get out of debt and avoid aggressive call-and-collect agencies.
We want to encourage New Yorkers to make their preferences for easily accessible digital channels to be heard. Pay off your debts on your time, not on an emotionally charged phone call or in a courtroom.
Reach out to Governor Cuomo by clicking here with the template below and make your voice heard. Once you’ve sent your email, share this information using #CollectWithoutCalls and let the governor’s office know that digital is easier for everyone!
The following text may be used as a template for reaching Governor Cuomo or other elected officials in your state. Please replace any content in the parentheses with your own information.
Subject: RE: 23 NYCRR 1
Dear Governor Cuomo,
My name is (your first and last name) and I am a (family member/service provider/advocate/community member) who resides in your district.
I feel that 23 NYCRR 1 concerning debt collection by third-party debt collectors and debt buyers places an undue burden on consumers in debt. It limits the ease and efficacy of digital communications and gives priority to intrusive and aggressive call-and-collect agencies. I prefer to use email and the internet to manage my own finances, and permitting 3rd-party collectors to email me directly (if / when) I am in debt gives me the ability to manage my accounts on my own time rather than at the collector’s discretion.
Please read here for more information about consumer preferences and see the movement on social media. #CollectWithoutCalls
Everyone knows that customers are the backbone of a business; if people don’t use your service or buy your product then you won’t have a business for very long. In order to solve this problem, companies often work to bring in as many new customers as possible, but you can’t forget to nurture relationships with consumers that you’ve worked with in the past.
According to Adobe, 40% of eCommerce revenue comes from returning customers which make up only 8% of total visitors! That number alone should inspire you to get out and talk to your old customers and figure out what they think, but there are quite a few more reasons you should cherish customer feedback and use it to strengthen your company!
Building brand promoters
The omnipresence of social media means that consumers that are excited about your company will shout from the digital rooftops to endorse you. Unfortunately, the power of social sharing also means that the opposite is true: if a person has a particularly negative experience with your brand, they will spread the word around fairly quickly.
Properly managing customer feedback can dramatically improve your brand’s reliability. A Net Promoter Score measures customer’s satisfaction with a business by asking: “how likely are you to recommend this (product/service) to a friend?” Customers that rate your business at a 9 or a 10 are considered promoters and are your best friend when it comes to spreading the word about your brand.
Maintaining a high NPS score is challenging, but by focusing some efforts on gathering and listening to customer feedback, you can gradually build effective, organic branding that sets you apart from your competition!
If maintaining customer relationships is so important, you may be hesitant to try and collect on debts for fear of negative feedback. But digital debt collection solutions can support your brand and your bottom line!
Incorporating feedback and iterating
Not every review will revolutionize your business. If you take every negative review to heart, you might start to feel a bit down on yourself, but by analyzing customer feedback in aggregate, you’ll start to see patterns emerge!
These patterns won’t appear overnight, and even some patterns may not give you the direction you’re looking for (it is still your business after all). That said, if you have dozens of customers asking for a new feature or piece of content, imagine how many more customers want the same thing that aren’t asking!
By listening to customer feedback and building new tools that your customers are looking for, you can demonstrate that you listen to them and further improve retention. Plus, incorporating these changes into your customer lifecycle can pay big dividends!
Promoters will continue to support your brand, bring in new customers, and in the long run, they will continue to spend more as your brand relationship improves. A survey by Bain & Company shows that customers actually spend more in months 31-36 of their relationship with a brand than they do in the first six months.
Creating a self-sustaining system
Feedback helps your business to grow and meet the ever-expanding needs of your market. If you don’t listen to your customers and build in a vacuum, you may soon realize that you were not solving the root of a problem. This isn’t to say that every customer suggestion or idea is the right one for your business, but if you take the time to listen to your customers you’ll build their trust and might just find the next right step.
When communicating with debt collectors it’s important to ensure they are legitimate before making a payment. Scammers posing as debt collectors will pressure you aggressively, use threatening language, and will not provide any documentation to verify the debt.. When a scammer is attempting to collect a fake debt using an email it’s called a phishing scam.
The vague nature of scammer scare tactics combined with the sense of urgency in their communications make for a worrisome case, but if you keep a level head and follow these quick tips, you can protect yourself from phishing scams.
1. Verify the sender’s email address
Scammers will often make themselves appear legitimate by operating under a company or other authority figure’s name, but they cannot replicate a sender’s address. For example, if you receive a collections communication from TrueAccord, it will be from one of our company domains meaning that the email address (after the @ symbol) will either read “trueaccord.com” or a related address.
Even if you are anticipating communications from a collector (or anyone else for that matter), take a second to review the “From” address confirm that they are who they say they are. And in the case of collections, if they seem suspicious or don’t have a company domain, don’t respond to the email or click on any links.
2. Validate but do not click on links
Debt collection phishing scams are designed to collect private information—like your credit card number or bank account and routing numbers—by tricking you into providing that data. Some of them are even more malicious and will try to get you to download malware directly onto your computer.
Any links provided in the body of the email could redirect you to fake sign-in pages that will share your login credentials with the scammer, payment portals designed to capture account numbers, or even prompt you to download malware that could jeopardize the security of your entire device.
In order to check that the links in the email are legitimate, you can hover your mouse cursor over the link to see a link preview, likely at the bottom of your screen with the full URL. Make sure that you do not click when previewing the link, especially if you spotted a suspicious email address.
By hovering your mouse cursor over the link without clicking, you can make sure that the link address information matches the information in the email explaining where the link will direct you.
3. Investigate the company
If a collector’s information seems accurate, but you don’t recognize the debt the most surefire way to dissuade a phishing scam is to probe more deeply. Look up the debt collection company online see if the company is registered with the Better Business Bureau, conduct a Certified Business Search through RMAI or and email the company’s support team to confirm they sent the message.
Like we mentioned above: a scammer’s best friend is an unaware consumer.
If the content of the email is legitimate, they will also have a way for you to validate your debt before you pay them a penny. Call, write, or email the debt collection company directly and request additional documentation Scammers won’t offer additional details because they don’t have it—a company that collects real debt will.
4. Take your time to process the content
Scammers know that they don’t have much time to get the information they want. Once a recipient of a phishing email can process the details and recognizes that they don’t add up, the scam is a bust. This is why scammers posing as debt collectors rely on aggressive, manipulative, and urgent language. They may threaten legal action or other types of harm and will stop at nothing to make you pay as soon as possible.
Real debt collectors will not resort to these tactics, and many of the actions that these scammers threaten are actually against the law. Don’t let explicit language and threats pressure you into paying; while being in debt has obvious downsides, fake debt does not. By remaining patient and seeing through their smoke and mirrors, you can report the email as a phishing attempt and safely move on with your day.
5. Check for spelling and grammar errors
Phony debt collectors are hoping to catch you off guard. Their phishing emails are designed to look professional on the surface, but with a careful eye, they can easily be picked apart. Scammers target distracted, uninformed, and unaware consumers which is why their messages are often hastily thrown together.
This means that phishing emails are much more likely to have typos, spelling errors, and issues with proper grammar. Read the message carefully and remain suspect if a message doesn’t make sense or look like they were thrown through a quick Google translate.
Stay informed and stay safe
It’s easy to feel overwhelmed by debt, and mounting debts from multiple sources can make it feel like you’re in a spiral. Scammers that send phishing emails prey on vulnerable consumers and take advantage of those financial fears, but keep these tips in mind and protect your financial well being.
TrueAccord is a machine-learning and Al-driven 3rd-party debt collection company that is reinventing debt collection. We make debt collection empathetic and customer-focused and deliver a great user experience.
Our digital-first approach to debt collection creates a cycle of collections growth:
1. Improve the perception of the industry
2. Provide a personalized experience
3. Build brand equity and collect