We use machine learning in many ways – to automate our contact strategy, to optimize our offer strategy, and to automate processes. In this podcast, our senior data scientist Aviv Peretz and senior manager of data Sophie Benbenek talk about one example: an algorithm that uses a combination of debt and semantic features to classify and respond to emails we get from consumers.
Business owners and CEOs live and die by top-line growth. Acquiring customers, hitting scale and paying attention to unit economics are all actions that lead to positive cash flow and sustainable business growth. On the other hand, focusing obsessively on your top line and acquisition, while often correct, can leave a lot to be desired on the back end.
A new report from Hiya, a call blocking app, is out and it is grim.
The company says:
As our phones continue to be inundated by robocalls, many people no longer want to pick up the phone at all. Unfortunately, this has led to important calls being missed, such as those from your doctor, your child’s school, the bank, and others. In Hiya’s first State of the Call report, we provide insight into how Americans use their mobile phones on a monthly basis given the rise in robocalls. For example, we discovered that only 52 percent of calls Americans receive on their phones are picked up, which also means that almost half of calls are unanswered. Key findings from the analysis, include phone call behavior, call pick-up rates, call duration, and top business industries calling mobile phones.
The report, which can be found here, goes on to elaborate:
- 70% of calls that are “saved in contacts” are picked up
- 53% of calls identified as a business are picked up
- 38% of calls that are “not saved to contacts” are picked up
- 24% of calls that are not identified are picked up
- 9% of calls identified as spam are picked up
What do these numbers mean for your call and collect strategy? Our clients are calling it a “crisis”. What does your data say?
This is a second post in a series from our in house counsel, Adam Gottlieb.
A couple weeks ago I posted about the three main themes I heard in the public comment forum from consumer advocates, businesses, and trade groups on the new California Consumer Privacy Act (CCPA). I heard from a number of ARM compliance professionals that the themes highlighted provoked discussion on how this law might impact our industry in particular. Today I want to take the discussion further and talk a bit about some of my concerns for how this law will likely add significant complications to your compliance platform.
The California Attorney General’s Office has been hosting a number of public comment forums around the state to hear from consumer advocates, business, and trade groups about the new California Consumer Privacy Act. The Act will require that businesses inventory and map personal data, provide consumers rights to see what data a business has collected, and allow consumers to opt out of data selling or transmission. If you have a website and interact with any consumers in California, you need to be concerned about the potential impacts of the CCPA to your business.
This law conflicts with state licensing requirements or industry best practices.
Section 1798.105 requires companies to delete a consumer’s information upon request. In the ARM space collections agencies have both data provided by their clients on consumer accounts placed for collection and data they collect throughout the collections process. Businesses in the consumer finance space, for example, need to keep this information to demonstrate how they handled the consumer’s account, to prove they followed the various laws regulating the industry, maintain accurate records for their finance departments, and to improve the collections process for consumers and clients. There is a list of exceptions to the requirement to delete a consumer’s information upon request, in section 1798.105(d). Subsection (d)(7) says you may keep information “To enable solely internal uses that are reasonably aligned with the expectations of the consumer based on the consumer’s relationship with the business” and Subsection (d)(8) says you may keep information to “Comply with a legal obligation.” These provisions are extremely broad and ambiguous. What might be “reasonably aligned” with how a collection agency would use consumer information will result in differences of opinion. Would a consumer expect an agency to keep a record for state or federal regulators? What about being able to provide a receipt for the consumer months or years later to prove payment on an account? Would a consumer, or even California regulators, agree that another state’s licensing rules that require an agency to keep that consumer’s records for a period of time trump the consumer’s request to delete that information? Without reliable guidance, definitions, or safe harbors this provision will result in disharmony, divergent expectations and likely legal battles.
A new opportunity for bad actors and for corporate espionage
Section 1798.140(c) states that the law applies to any business who 1) Has annual gross revenues in excess of $25,000,000, or 2) Alone or in combination, annually buys, receives for the business’ commercial purposes, sells, or shares for commercial purposes, alone or in combination, the personal information of 50,000 or more consumers, households, or devices, or 3) Derives 50 percent or more of its annual revenues from selling consumers’ personal information. This provision alarms information security officers in large and small businesses alike. On nearly every website, each time you visit a site and browse around your IP address is logged by the administrative system for the web page. As written, merely collecting an IP address could count towards the 50,000 threshold to trigger compliance with this law.
A Distributed Denial of Service attack (“DDOS”) is an increasingly common method for bad actors to try and hack into a business database by bombarding the company’s website with hundreds of thousands of web site visits, overwhelming the system and causing it to crash and distracting the company’s administrators and allowing the hacker to get easy access. This creates a scenario where any hacker going after valuable consumer records can add the headache of complying with CCPA. Another unpleasant possibility would be for an unhappy consumer or a competing business to launch a DDOS attack and then sending dozens or hundreds of information requests under the CCPA. Simply search online for “how to do a DDOS attack” and you will find dozens of articles and videos that explain just how easy it is for the average person with minimal technical knowledge to start their own DDOS attack. If your company does any business in California and any IP addresses used in this attack are from a California resident, your company will have to comply with the CCPA for all of your California consumers. These albeit too common scenarios are yet unaddressed in the law.
Client information? Agency information? Who is responsible for what?
Collection agencies must keep detailed records of how and when we communicate with consumers. Whether agents are calling, responding to letters, emailing, or texting, we must know the details of what we discuss to meet our federal and state compliance regulations, improve our chances of collecting on outstanding balances and to inform our clients on the status of their accounts. It is unclear in the CCPA whether an agency would be required to delete this valuable information at the request of a consumer. As written, the results of skip tracing could be considered personal information and if an agency is required to delete current addresses or respect an opt-out for using this information it is impossible to provide legally required disclosures to consumers. A likely unintended consequence may be more creditors choosing to sue clients than facing the legal uncertainty posed by the CCPA.
An issue raised by the CCPA particular to collections is there is no clear delineation between whether the client or the collection agency bears the responsibility for honoring a consumer request to opt out or to delete information. It is common for a consumer to communicate with both the creditor and the agency where the account is placed while the account is in collections. If a consumer tells the creditor that they are opting out and want their information deleted, does the creditor have to respect that request even if it makes the account unworkable? Will the creditor need to relay this request to the agency working the account and require them to delete consumer information? The law is unclear as to how the creditor or the collection agency can reasonably comply with consumer wishes without making the account potentially uncollectable.
These issues can be resolved before the law goes into effect.
The CA DOJ must build in a safe harbor provision to addresses these concerns that go beyond the consumer finance space into all forms of businesses interacting with consumers (think hospitals). We need to raise these issues with the regulators and ensure that there is no ambiguity around what information must be deleted or provided to a consumer upon request, the specific exceptions to this provision, how to transmit that information to consumers securely, and to protect businesses and consumers from bad actors. If you are a business who interacts with consumers, you need to either attend the next public comment forum nearest to you or provide critical feedback to the regulators and to follow up with a formal written response. You can find information on the public forum schedule, along with an email address and postal address to send your feedback below.
Upcoming events: https://oag.ca.gov/privacy/ccpa
Email to provide feedback directly to regulators: firstname.lastname@example.org
Postal mail address to provide feedback:
CA-DOJ, ATTN: Privacy Regulations Coordinator
300 S. Spring St.
Los Angeles, CA 90013
ACA International members should consider participating in the meetings to learn more about the CCPA or submitting comments and share their experiences with ACA by emailing our Communications Department at email@example.com Attn: Katy Zillmer.
Dealing with debtors is a frustrating but unavoidable consequence of running an eCommerce business. Even the most experienced sellers can find the issue difficult to manage, but when you’re just starting out it can be impossible to know where to start.
To help you out, we’ve put together this introductory guide to eCommerce debt collection for beginners. We hope it will help you retrieve that money you are owed (plus we’ll take a look at the tricky area of chargebacks).
Getting started with eCommerce debt collection
Startups can live and die on their cash flow. So when someone isn’t paying up that can be a major issue for your eCommerce company. If you’ve tried every tactic to get them to pay the money they owe you should think about working with a debt collection agency. But before you jump right in, you should know that the quality of collection agencies can vary significantly. Make sure to undertake the following three checks before you hire anyone.
Check the agency’s reputation
Whenever you are working with a third-party you must consider how they will represent you. Your brand identity will be one of the single most important factors to eCommerce success so it’s vital you do everything you can to protect it. Unfortunately, we know from our own experiences that some debt collectors can be rude and aggressive, using intimidating methods to retrieve money. However, not every collection agency is like this. Finding a customer-focused collection agency that works with the debtor and not against, helps to increase customer retention and improve brand perception.
Check their processes
Before you start working with any debt collection agency you need to know what is going to be expected of you first. Every collection agency is different but TrueAccord’s process looks like this. Initially, we recommend you notify your debtors that we will be in contact. Then you need to send us the debts you would like recovered. Finally, you need to input your parameters into our easy-to-use automated system. After that you can follow the recovery process on our creditor dashboard which gives you up-to-the-minute information including how much has been recovered.
Check their success rates
Ultimately, there’s no point in working with a collection agency that will fail to secure the money you are owed. The latest stats show that, although consumer debt is one the rise, the total recovered by debt collectors is falling. What does that show? The traditional debt collection methods are becoming less and less productive. FinTech debt collection startups, however, are bucking the trend. TrueAccord, for example, uses machine-learning and AI to more effectively engage with customers on a far larger scale.
Dealing with chargebacks
When it comes to eCommerce, chargebacks can be a huge problem for a new business. If you think a customer has fraudulently made a chargeback claim then debt collection can certainly help you out.
What is the issue?
Up to 30% of eCommerce chargebacks can be put down to buyer’s remorse, a spouse using their partner’s card without their knowledge or friendly fraud. That’s a misuse of the chargeback function, which was introduced to protect consumers from fraud. Even worse, it could seriously affect your business which, as a startup, is going to rely heavily on cash flow.
Can debt collection help?
The good news is that a collection agency can certainly help you retrieve the money you are owed. Now, there are pros and cons of sending a chargeback to collections so the first thing you need to do is communicate with your customer to determine whether the chargeback was fraudulent or not. If it was a legitimate purchase, then the customer is liable to pay you even though you can’t charge their card.
It’s worth remembering that just because you are involving a collections agency, that doesn’t mean you have necessarily lost them as a customer forever. In fact, some TrueAccord customers have gained $2 in additional business from previously lost customers for every $1 we recovered for them. Find an eCommerce debt collection agency that deals with the customer in a sympathetic manner to give yourself the best chance of spinning a negative into a positive.
As you have seen, eCommerce debt collection is a relatively simple process if you find the right company to work with. Remember to do your research and find a company that treats customers sympathetically but still has great results.
FinTech debt collection startups are transforming a dated industry that was relying on archaic methods of practice. The industry disruptors are seeing dramatically increased recovery rates while offering a more pleasant experience for both debtor and creditor.
So how are they doing it? Let’s take a look…
1) Communication modernization
Humans are communicating with each other on unprecedented levels, but forms of communication have evolved. People aren’t picking up the phone to each other anymore, instead they text, email or use social media. Did you know, for example, that up to 68% of customers will open an email? So why do traditional debt collection agencies stick to those dying forms of communication? Digital communications, such as email and SMS, are the industry’s link to those people who have ditched the phone. This modern, omni-channel approach helps to increase long-term engagement with the client and drives up recovery rates.
2) Customer interaction analysis
FinTech debt collection startups, such as TrueAccord, know that they can learn from every interaction with their client. That’s why digital debt collection agencies use powerful AI to analyze their communications and work out the response with the best chance of success. This data-driven method is highly effective with follow-up emails based on user behavior performing almost three times better than the traditional method.
3) Communication development
By using modern forms of communication, FinTech debt collection startups have a huge advantage over the legacy agencies. Every piece of communication can be analyzed, altered and improved by state-of-the-art AI. TrueAccord is constantly evaluating their communications with customers and making improvements to drive up engagement and, ultimately, recovery rates. For example, it’s possible to analyze the effectiveness of one call-to-action button in an email compared to another. We can also work out which email subject lines are better at convincing people to open their emails. Our machine-learning engine can then help us create content that has the best chance of engaging with the customer.
It’s very difficult for legacy agencies to scale their operations. New manual debt collectors need to be hired and then subjected to extensive training. Once they’re on the job, they often receive low, commissioned-based wages, which can lead to low-morale and a lack of motivation. FinTech debt collection startups have removed these issues by implementing a highly-scalable communication process. More than 90% of TrueAccord’s interactions with customers are automated, which means each care agent can handle 10,000 cases compared to the industry average of just 800. The sheer number of accounts each person can handle naturally increases recovery rates. The automation of the communication process also has the benefit of reducing compliance risks. Every email sent to our customers has been pre-written by talented content creators and approved by a team of lawyers.
5) Personalized payment plans
Customers fall into debt for a number of different reasons. They may be in-between jobs or had an accident that cost them financially. FinTech debt collection startups understand this and, more importantly, have the means to do something about it. TrueAccord’s hi-tech AI analyzes millions of previous interactions to work out the best course of action for an individual. If a customer needs a longer time to pay off their debt, our data-driven system can recognize that and offer a highly personalized payment plan to cater to the customer’s needs. Where many legacy agencies once worked against the customer, TrueAccord works with them to help them out of financial difficulties. This sympathetic approach helps to increase engagement and drive up liquidity percentages.
As you have seen from the above examples, FinTech debt collection startups really are changing an out-dated industry. A machine learning and data-driven approach is providing a much more sympathetic service which produces outstanding recovery rates. Speak to TrueAccord today to find out more about their revolutionary methods.
On January 8, 2018 the California Department of Justice held a public forum to receive comments on the California Consumer Privacy Act (“CCPA”). While this law was passed in June of 2018 there is still significant work to be done to refine and implement the new legislation before it goes into full effect on January 1, 2020. I attended this packed forum and came away with some key insights from those who spoke on how businesses, consumer advocates, information security professionals, and attorneys who specialize in data privacy view the law in its present form.
I heard three common themes that were echoed by consumer advocates, businesses, and trade groups that I’ll address in more detail below.
The definitions of personal information under this law are extremely broad and ambiguous.
1798.140(o)(1) defines personal information as “information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” It goes on to list common identifying information like name, address and SSN, but also includes “unique personal identifier, Internet Protocol address, email address, account name, other similar identifiers.” The law also references inferences that may be drawn from this information to create a consumer profile. By defining personal information to as little as an IP address or inferences drawn about a consumer this law will cover many millions of records and require businesses to create complicated new tracking systems to categorize this data. This will be costly for businesses, and due to the ambiguity of this definition it may be impossible to comply or provide consumers with the data they’re requesting.
The threshold above which a business must comply is very low.
The threshold to trigger compliance could be any of three events. 1) Gross annual revenues in excess of $25,000,000, 2) Buying or receiving, or sharing (emphasis added) for commercial purposes, or 3) deriving 50% or more of annual revenues from selling consumers’ personal information. It was the second point that businesses and trade groups were most concerned with. In combination with the definition of personal information this threshold could be considered as little as 50,000 unique website visits per year. This is only 137 unique site visits per day, which could easily occur for many businesses that happen to collect IP addresses, and “share” the information with any other individual or third-party service provider. The unintended consequences of this low threshold and the ambiguity in definition of personal information will pull thousands of businesses into being required to comply with this law.
Another point raised is that it is unclear when the requirements of the law apply once a business crosses one of these thresholds. Is it immediately upon passing one threshold? Is it retroactive for the activities in the calendar year prior to passing the threshold?
The law will require businesses to link data sets together that will create personally identifiable information that otherwise wouldn’t exist and serves no business purpose. This creates more risk in the event of a data breach.
If a consumer provides a “valid request” to a business, which is ambiguous and undefined, a company must gather all consumer info that may fall under the ambiguous definition in the law and provide it to the consumer. To provide this consumer data a business will be required to combine information from various unrelated sources, that on their own would not easily be used to identify a consumer, into a single record that easily identify a consumer and serves no business purpose. Consumer advocates, trade groups, and businesses expressed significant concern about this requirement. How is a business supposed to securely transmit this information to a consumer? How does a business track these requests and prove they’ve satisfied the requirements? How should a business secure this newly created record that will surely be a hot target for hackers?
It’s clear that there is a long way to go before this law can meet its intended purpose of protecting consumers and requiring businesses to treat consumer data appropriately to be in compliance. Our industry faces unique challenges to comply with this law due to the heavily regulated nature of our business. The complications this law will add to our compliance platform cannot be understated. I encourage you to take the time now to read the law, consult with your attorneys, and provide thoughtful comments to the regulators during this open comment period. We have an opportunity to raise our concerns about this law and have a real impact on the final language for this regulation with which we’ll have to comply.
For years, traditional debt collectors have relied on outmoded and ineffectual techniques to collect money owed… but that is all changing.
Debt collection applications are revolutionizing the industry, utilizing machine-learning and AI to create a highly-effective and more convenient process for everyone. Traditional debt collectors don’t want you to know this, but the digitization and automation of the industry is producing breath-taking results. Here’s how…
Convenient communication lines
The world has never been more connected, but the way in which we communicate is changing. The average American aged 18 to 24 now sends 67 texts per day and receives 61. The telephone call is becoming less relevant by the hour, which means we need a new way to speak to our customers. Debt collection applications are ditching the call center-based communication lines of the past in favor of modern forms of messaging. Customers can now respond to emails and text messages when the time is convenient for them. Where traditional debt collection agencies may have called a debtor up to 10 times a day to try to get a response, companies such as TrueAccord can contact customers three times per week. That’s a huge saving in money and resources, plus the customer won’t come away from the experience feeling harassed.
When you’re looking to retrieve as much money as possible from debtors speed is vital. Up to half of all your meaningful interactions will be made within the first month of communications. After that the success rate dwindles. But when you’ve got a number of debtors to contact, how do you know who to contact first? Legacy collection agencies are constricted by the number of call center workers they have and how quickly they can work. Debt collection applications are highly-scalable with automated communications easily created in a much shorter time period. That means no matter how many debtors a company might have, each can be contacted very early on in the debt cycle.
Flexible payment solutions
Traditional debt collectors largely rely on a one-size-fits-all approach to payment solutions. Typically a customer in debt will have to call the debt collection agency to make a payment or organize monthly payments to work off their debt. However, this method really isn’t convenient for everyone. Debt collection applications can use a digital, self-managed process to create a personalized repayment plan that works for them. This makes it much easier for the customer to work themselves out of debt and into a far healthier financial position. For the customer, the process is much fairer and easier to process. For the business, it could be the difference between keeping the client on-board or losing them.
When you are relying on call centers to facilitate communications, every call is a compliance risk. Humans are driven by biases, emotions, even how much sleep they’ve had. They can be manipulated into unwittingly breaking rules or simply making mistakes. Debt collection applications have removed those issues. Digital communications can be pre-approved by a team of lawyers before they are sent to the client to ensure they comply with the ever-changing rules of the Consumer Financial Protection Bureau. At TrueAccord, we use code-based communication which further enhances the protection we can offer. Whenever a rule or regulation is changed, we make an easy update or modification to the code to keep all communications compliant.
For hundreds of years, debt collectors have enjoyed a less-than-favourable reputation. Their recovery tactics were often intimidating and confusing for the customer — we know that from personal experience. However, TrueAccord’s digital-first approach engages with customers in a way they are comfortable with. No more threatening or harassing phone calls to deal with. We use specialist content creators to write our communications in a friendly, clear and unintimidating fashion. We also encourage customers to take control of their own debt and regain financial health. This client-focused approach increases customer retention and gives the client a more positive debt collection experience than they would have ever received previously.
As we’ve seen from the above examples, debt collection applications really are revolutionizing the industry. Almost every facet of the process has been improved through a digital-first and data-driven approach offering better results and an improved experience for everyone involved. To start using one of TrueAccord’s debt collection applications, contact us today.
The debt collection industry was living in the Dark Ages before companies such as TrueAccord started using machine-learning and AI to revolutionize the process.
Now, digital debt collection services are dramatically improving recovery rates while increasing customer retention. But how could digital debt collection help your company? Let’s take a look at some of the main benefits for your business.
Increased recovery rates
The digital revolution has arrived just in time for businesses that rely on collection agencies to recover money owed to them. The effectiveness of the traditional methods has been continuing to fall in recent years with $13.3billion collected in 2012, falling to $11.4bn in 2016. Many legacy agencies are still relying on a one-size-fits-all approach to repayment plans and dying forms of communication such as telephone and snail mail. Thanks to advanced AI, digital debt collection agencies can now analyze each customer’s financial situation and construct a highly-personalized repayment plan. This customer-centric approach makes the repayment process as easy as possible for the debtor. Combine that with forms of communication relevant to the modern age — such as email and SMS — and you get far higher recovery rates.
Greater legal protection
Protecting your company against legal wrangles is a major concern for any business owner. While you want to retrieve money owed, you don’t want to do it in a way that will get you in trouble with the Consumer Financial Protection Bureau. Traditional debt collection often relies on call center workers communicating with customers on the phone. But every call is a compliance risk. Humans can be dictated by their emotions or can be tricked into making mistakes by ill-meaning debtors. Using a digital debt collection service will be far safer for your company as compliance can be automatically added to all customer communications. Furthermore, when new regulations are introduced a simple update can be made to the code to keep them in line with the law.
Improved customer retention
Keeping hold of your customers is far cheaper than acquiring new ones. In fact, it can cost five times more to attract a new client than retain an old one. While debt collection is an awkward process that could drive a wedge between you and your customer, some methods retain clients better than others. Many traditional debt collectors offer an experience that is highly off-putting to clients — it was one of the reasons we launched TrueAccord. Their communications are often full of jargon that, at best, confuses the client or, at worst, intimidates them. The best digital debt collection agencies use modern communication methods with sympathetic language designed to engage with the customer — no more threatening letters or inconvenient phone calls. Customers can also devise their own repayment model, placing the power in their hands and retaining their loyalty. Of course, whether you want to take the customer back is up to you, but at least you might have the choice.
When you own or run a company, cash flow is going to be one of your main considerations. When a customer isn’t paying up it can seriously dent your plans or even put you out of business. While hiring a debt collection agency is something no-one really wants to do, it is sometimes the only option. Digital debt collection agencies, such as TrueAccord, have revolutionized the industry making it friendlier, retrieving more debt while keeping customers on board. If you think a digital debt collection agency is the right move for your company, contact us and take your first steps with TrueAccord.