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