Call centers are notorious for reaching hundreds, if not thousands, of consumers several times per week (and even several times per day!). The debt collection industry is plagued by the perception that collectors are relentless and uncaring, which makes resolving debts even more challenging. Digital debt collection strategies aim to alleviate the stress of incessant calling for consumers, and also provide unique, powerful solutions for creditors. Collection metrics Digital-first debt collection strategies provide creditors the ability to track and aggregate more objective performance metrics that help strengthen their collections strategy. Qualitative metrics from traditional call centers are still subject to the endlessly variable human element of a phone call.  When outreach is entirely automated, it becomes easy to A/B test simple changes (new subject lines, different greetings, etc.) and determine which are the most effective. But how do we define effectiveness? At the end of the process, an effective collections strategy is one that leads customers to make a payment.  There are a few key metrics that call centers use to drive customers to this end goal that can be easily supplemented or overtaken by digital collection strategies. Calls per account and calls per agent Traditional collection agencies, like any other sales call center system, track the total amount of calls made to each customer and by each agent on the team. When individual agents are responsible for contacting customers, they have to hit an outreach quota. This quota reflects directly back on the calls per account, or how many times an individual customer has been contacted.  As agents are required to call customers and collect on accounts, the calls per account may increase to a point where customers feel overwhelmed and over-contacted (which can even lead to symptoms of anxiety and depression). At the same time, if countless calls are being made, and an account is not paying, there is a clear gap in effectiveness.  One of the advantages of a digital debt collection strategy is that agencies can reach customers with relevant messaging at times that work for them. This can include hours in which call centers are no longer legally allowed to reach a customer—before 8am or after 9pm. With these legal limitations in place and the need for agents to meet quotes, traditional collections strategies encourage an artificial inflation of outreach numbers that may not be positive. Hit rates, percentage of outbound calls resulting in promise to pay (PTP), and call quality  Call volume is not the end-all-be-all of call center metrics though. Simply tracking output numbers isn’t enough when engagement is the key metric. Hit rate is defined as the total number of calls divided by number of those calls that are answered by customers. While this number can be helpful in narrowing which calls were more successful than others, it cannot reach the same level of detail as a full digital strategy. In the case of a phone call, there are limited options once the phone has been dialed: The customer does not answerThe customer answers but ends the call before promising paymentThe customer promises to pay Trying to understand what leads to a successful payment on a call is then dependent on the agent’s perspective. Digital debt collection conducted through machine learning is able to communicate using personalized and consistent content. Hit rate, PTP, and call quality analysis can then be expanded on, and performance can be measured by: Email DeliverabilityEmail open ratesLink click ratesWebsite engagement (Including clicking on further links, filling out forms, viewing specific webpages, and more)Online payments These data points can help pinpoint where in the process a customer was lost, improve the next attempt at outreach with that data in mind, and eventually guide the account to a payment. With more data and longer periods of time, machine learning processes only continue to improve. Updating your collections strategy  TrueAccord takes our digital strategy a step further by looking beyond simply using digital channels and focuses on the power of machine learning to continuously improve our collections performance. We've come to understand that creating an effective, empathetic collections experience actually comes from creating a more analytical and AI-driven process. With better visibility into performance, more granular data points, and more accurate reporting available than ever before, digital debt collection strategies strengthen the power of any collections team.

Debt collection agencies work to recover money on behalf of creditors. Unfortunately, not every debt is collectible, and it’s important to recognize these edge cases before they become bigger problems. What are accounts uncollectible? Accounts uncollectible, also known as uncollectible debts, are accounts owed that have almost no chance of being paid off. While it is better for the customer’s credit score and overall financial health, as well as for the lending company’s growth to receive these payments, there are some debts that will simply never be paid. There are several reasons that this may be the case: A customer is not reachableA customer is unable to payA customer declares bankruptcyA customer disputes the debt While some debts may reach a point where they become uncollectible, there is a lot that can be done before those delinquent accounts reach the point of no return. Debt collection agencies serve to lessen the impact of accounts that become uncollectible and work to prevent them from becoming bad debts.  The longer a company waits to adopt a collections solution, the more accounts they risk becoming uncollectible. We’ve already looked at some reasons why a debt may be hard to collect, but if a customer owes a debt, they have to pay it, right? Unfortunately, companies that make this assumption end up with debts on a timer. A debt may reach its statute of limitations for collection. Each state has distinct requirements that affect how long companies and collection agencies can legally collect on a debt. While a select few states have statutes that extend the collection window to up to 15 years, most are limited to somewhere between 3 and 6 years. Once a debt ages out of these windows, it is considered a “time-barred debt.” Collecting a time-barred debt is possible, but the approaches are limited and creditors can no longer sue to demand collection. Even if the debt is new enough to be collected, TrueAccord’s customer data indicates that new accounts (those in collections for fewer than 90 days) are four times more likely to begin a payment plan than those who’ve been in collections for more than six months.  Those same new accounts are also eight times more likely to begin paying off a debt than those who have been in debt for longer than two years. This rapid decline means that creditors need to act quickly to prevent an account from slipping away. How do you avoid accounts uncollectible? If a customer has not paid a debt for one reason or another then companies are working against the clock to collect. The typical solution to recouping otherwise uncollectible debts is to hire a third-party debt collection agency. Many agencies operate by reaching out to customers and requesting (or demanding) payment for a debt, hoping to instill a sense of urgency in the customer. One of the issues with this approach is that customers are forced to engage on the collector’s time rather than on their own. TrueAccord recognizes that when customers work on their own time, they are given power over their financial freedom and are more likely to commit to a payment plan.  Another key issue with the traditional collections model is a lack of proper analytics. While call centers may reach hundreds of customers daily, each call can vary wildly due to the personal nature of a phone call. Digital-first collections strategies allow agencies to regularly send consistent messages and accurately test which of those messages prompt the most engagement and, ultimately, lead to payments.  Any amount of uncollectible debt directly translates to a loss for creditors. The best option available to companies that wish to avoid losing out on delinquent accounts entirely is to embrace a digital-driven debt collection strategy. Uncollectible accounts will only get more difficult to recover over time, and if teams wait too long those accounts will truly be untouchable. 

Whether you’re trying to collect on small accounts or massive debts, working with an agency can help to improve your business’ bottom line. There are different approaches to the collections process and understanding those differences, the role of agencies, and the industry as a whole can help you make the right decision for your business. What is a debt collection agency? A debt collection agency, or debt collector, is a company, team, or individual that works to recover money on delinquent accounts. While some large companies opt to dedicate internal teams to the collections process, smaller and mid-sized companies opt to work with 3rd party debt collection agencies. How do debt collection agencies work? Collections agencies function as a financial service for companies that seek to outsource their collection needs and provide consumers a point of contact for paying off their debts. Agencies can work with a variety of companies and collect one or several types of debt, including: Credit card debtMedical debtCar loan debtHome loan debtPersonal loan debtBusiness debtStudent loan debt Delinquent balances that would otherwise sit unpaid are compiled into a portfolio for the debt collection agency to manage. These debts are still owned by the crediting company, and the collection agency functions as a liaison between the creditor and consumer. This relationship does not come without a cost.  Debt collection agencies are paid based on a percentage of the debts that they are able to collect. This traditional collections model often extends to individual collectors whose earnings are paid out on a commission structure. Traditional debt collection agencies and their agents, therefore, are incentivized to reach customers however they can. It’s important to recognize when a debt (or portfolio of debts) may no longer be collectible and what you can do to engage customers before their accounts reach that point. Debt often can be tied to feelings of anxiety, stress, and depression, and when these feelings are met with persistent contact, rather than understanding, they can worsen. It is for this reason that the Consumer Financial Protection Bureau is working to make changes to existing debt collection laws and better protect consumers from predatory practices. Debt Buyers While typical agencies work with creditors that own the debt, debt buyers will outright purchase hard-to-collect debts. A debt may be considered hard to collect if it is nearing its statute of limitations for collection, a particularly small debt, or if other agencies have been otherwise unsuccessful in collecting it. Accounts with similar features (amount owed, age of the debt, amount of communication) will be grouped together, sold, and managed as a single portfolio. If, for example, thirty customers owed Creditor A $100, but their debts went unpaid and ignored for a long period of time, Creditor A may no longer feel it is worth the time or resources required to pursue them. A debt buyer would purchase these debts from the creditor, and assisting the creditor in recouping the loss and reinvest that capital. Creditor A would recover a small portion of money they were not able to recover, and the debt buyer would then be able to freely pursue the debts for their own profit. It’s important to recognize when a debt (or portfolio of debts) may no longer be collectible and what you can do to engage customers before their accounts reach that point. Using customers' preferred communication channels and engaging with customers empathetically can help them recognize collections for what it is: a financial service. The future of debt collection agencies Expanding laws and developing technologies are gradually reshaping the collections industry. While the market itself may not change substantially (there will always be creditors, customers, and collectors), the ways in which collection agencies conduct their business will change drastically.  Updates to the Consumer Financial Protection Bureau’s regulations, along with evolving digital debt collection tools are driving a new era of collections practices. TrueAccord is dedicated to seeing these changes made real with our customer-focused, digital first collections strategy. Selecting the proper strategy for your business can make an enormous impact, but a proper collections strategy takes time to build, so get planning!

In an effort to further improve the debt collection experience for consumers, TrueAccord filed comments in response to the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Debt Collection Rulemaking. Our experience using mostly email to communicate with consumers about their debts gives us the unique ability to provide detailed feedback to the CFPB on the parts of the Proposed Rule that impacts the use of email, data science, and machine learning in debt collection.  We know that consumers in debt collection benefit from both email communications and machine learning technologies. Email communications allow consumers to access content at their convenience (including emails that contain legally required disclosures); new machine learning technologies provide additional information and payment options based on the consumer’s interactions to further personalize their collections experience. What are we suggesting? Make the transition into collections communication simpler When emailing a consumer, either an initial communication—one containing the validation notice in the body—or any communication relating to the debt, a debt collector should be able to contact that consumer at the email address that the consumer provided to the creditor.  The proposed rules do not currently provide this option without causing an undue burden on consumers. TrueAccord highlighted that unnecessary restrictions in the proposal greatly limit the ability to communicate with consumers via email. Consumers who have already provided their preference for electronic communications to their creditor(s) would be forced to take extra steps because they have fallen into collection.  Define and properly evaluate email as a unique medium Our customers regularly tell us that email is very different from phone calls and even paper mail. As such, email communications warrant different treatment under the FDCPA and should not be subject to the standard time, place, and manner restrictions that were designed for and apply to primarily oral communications. TrueAccord asked the Bureau to take this opportunity to further modernize the FDCPA by distinguishing that certain provisions do not apply to email.  Recognize other, optional forms of electronic communications as legitimate We raise concerns over the proposed definition of “attempted communication” and “limited content message.” The current proposed definitions have the unintended consequence of limiting digital advertising and other electronic messages that consumers can opt-in to receive.  What is our goal? TrueAccord’s suggested changes will increase the proposed rule’s ability to make collections more efficient, provide actual notice to consumers, give consumers immediate access to information, and enable consumers to control how they want to communicate. The debt collection proposed rulemaking is an opportunity to empower the vast majority of consumers who prefer to communicate electronically. The Bureau must take advantage of this opportunity. You can read TrueAccord’s full comments here.

On August 8, 2019, the Seventh Circuit Court of Appeals (7th Cir.) released its long-awaited verdict in the case of Lavallee v. Med-1 Solutions, LLC, 17-3244 (7th Cir. Aug. 8, 2019). The court ruled that Med-1 Solutions, LLC did not properly provide the validation notice as required by the Fair Debt Collection Practices Act. Additionally, the court held that the first email Med-1 Solutions, LLC sent did not constitute a debt collection communication. Despite the unsuccessful method by which Med-1 attempted to email the initial communication, it is possible to do so in a compliant manner consistent with the current interpretation of the FDCPA. The court’s decision The Court held that Med-1 Solutions, LLC did not properly deliver the validation notice to the consumer. Med-1 sent the Plaintiff an email, but the email did not contain the text of the validation notice. Instead, the email contained a hyperlink to a page where the Plaintiff would have had to enter personal information, and then take four additional steps in order to open a PDF containing the full initial demand letter with the required validation notice language.  The Court reasoned that Med-1’s email did not constitute a communication because the email did not have any content relating to a debt. The Seventh Circuit reasoned that the “email conveyed three pieces of information: The sender’s name (Med-1 Solutions, LLC)Its email addressThe fact that it 'has sent … a secure message.' ” The email did not convey any information about the debt so it did not constitute a communication. The FDCPA requires debt collectors to provide the validation notice in the initial communication or within 5 days of the initial communication in writing. Since the email did not constitute an initial communication, the Court found the initial communication happened over the phone. Med-1 Solutions, LLC, however, did not provide the validation notice during that call or in writing within 5 days because the company believed that their email satisfied the requirement.  How to provide a validation notice in initial communication via email When sending an initial communication by email, the content in the body of that email must contain all the validation notice requirements (15 USC § 1692g). It should: Identify current creditorState the amount owedProvide the validation statement explaining the customer's dispute rights With the right information provided in the initial communication customer's are more likely to recognize the account and trust that the email is from a legitimate debt collector. It should contain information on: How to unsubscribe from future emailsTelephone contact informationThe business' hours of operation Beyond that, it should comply with any other state, federal, or local obligations such as whether or not to provide a disclosure or other information. These are some of the principals embraced in the CFPB’s proposed debt collection rule. Had Med-1’s email contained this information in the body of the email, the result in the case would have been different. Limited content emails  The Seventh Circuit’s decision also highlights a concern with sending limited content communications via email. This case reinforces the importance of developing an email strategy and fully understanding deliverability requirements. This can ensure emails are delivered and not identified as spam and filtered away from a recipient's view. A full deliverability strategy may consider several factors including, but not limited to ISP reputation, providing relevant content in the body of the email, and more technical aspects of email such as throttling, bounces, and bulking. These elements can greatly affect an email's ability to reach its intended recipient and ultimately convey its message. Med-1 Solutions, LLC did not have a prior relationship with the Plaintiff, they did not remember receiving the email, and they did not click on the hyperlink provided in the email. As the lower court noted in its decision, the Department of Homeland Security warns consumers from clicking on links received in emails from unknown senders. The Seventh Circuit decision showcases the ineffectiveness of using a limited content message to reach and engage a consumer. TrueAccord and the future of digital debt collection We work to create a digital environment that places customer experience at the forefront of our collections strategy. This means ensuring not only personalized content delivered through our machine learning technology, flexible payment options, and digital access for customers to manage their debts. We do all of this via software that guarantees compliance. If you want to learn more about how our technology can change your strategy, reach out to our team here!

In January 2019, AccountsRecovery.net launched a survey of more than 100 companies in the credit and collections industry to “assess the penetration of digital communication tools and how much they are being used in the industry.” “Digital communication” includes channels such as email, text messaging, and web portals that work to reach to consumers.  However, these channels are secondary to outbound calls and paper mail, practices that have remained unchanged for decades, even though 70% of companies believe that digital communications have had a moderate to significant impact on their collection rates! Updating these channels for the modern age can improve the collections experience for both the customer and collector. Let’s find out how! Communication Channels Email According to the AccountsRecovery survey, more than half of the companies that took part in the survey are using email communication. A majority of respondents also said that they are sending emails to or receiving emails from fewer than 20% of their users. This means that 80% or more of their customers are regularly receiving calls from collectors to discuss resolving their debts rather than receiving digital communications.  According to TrueAccord’s 2018 consumer survey, the majority of consumers using our site would rather resolve their debts online than through other channels. With such a large number of consumers interested in online engagement, it’s easy to see why we’ve leveraged digital channels to modernize the collections industry. We use email communication as our primary form of contact at every stage of the customer lifecycle, and each message is customized for the individual. Mobile and Text Messages The prevalence of smartphones has made reaching out to users on their mobile devices an effective and essential channel for communicating with customers. Unfortunately, only 21.6% of collection companies are actively using text messaging as part of their outreach strategy! Even some of the largest agencies in the industry are only texting about ¼ of their customers.  More than 65% of companies in the collections space that are not currently using text messaging as a channel are concerned about two things: a fear of being sued or not fully understanding what is and is not allowed of them.  TrueAccord has taken steps to directly address these issues by hard-coding compliance parameters directly into our system, so we are able to securely reach our users where they are: on their phones. In fact, more than 85% of our web traffic comes from smartphones and tablets, and we are able to drive traffic to the right pages through push notifications on those devices. These notifications serve the same purpose as text messaging but are uniquely catered to that specific customer’s needs. Web Portals Portals and landing pages created for consumers should be exactly that: designed with them in mind. The vast majority of companies in the collections space have portals specifically designed for customers to manage their accounts, but 75% of those companies report remarkably low engagement through those pages.  Creating an engaging portal means answering the question: “How can we make the experience personalized for the customer?” TrueAccord embraces this in its design methodology; Shannon Brown, TrueAccord’s Product Design Manager, says that “we’re not pushing offers to them, we’re looking for information [about the nature of their debt] to customize for their needs.” Our design embraces our mission of giving consumer’s control of their financial health.  You can learn all about TrueAccord’s design philosophy by listening to our full interview with Shannon here! By focusing on developing interconnected, customized content that reaches users through multiple channels, we can reach consumers via email and mobile push notifications with the goal of bringing them back to our website.  The debt collection industry at large has a long way to go to meet consumer expectations about financial services. Our machine learning algorithm optimizes which message to a customer to send on what channel, addressing those expectations and letting users manage their debt at their own pace. This is also why we work to provide our users with as much visibility into their debt as possible through easily accessible digital channels.

https://www.youtube.com/watch?v=kNh3zrpNnso&feature=youtu.be Ohad Samet, TrueAccord’s co-founder and CEO, joined thought leaders in fintech at CB Insight’s Future of Fintech 2019 conference. Learn everything you need to know about how TrueAccord is reinventing the collection experience. TrueAccord is dedicated to revolutionizing the debt collection industry by redefining the user experience for consumers in debt collection. We work to empower consumers to regain control of their financial health and help them to better manage their financial future. Our product leverages machine learning for intelligent digital communications and empathy driven UX interfaces.  The Debt Collection Market Debt collection is an enormous market with nearly $13 billion in annual industry revenue. In the US alone, that equates to more than 17 million consumers per year who are impacted. These consumers are primarily pushed to provide payment by call centers which employ collectors —low-base, high-commission employees—who can contact a consumer to no end.  Incessant contact from these collectors, whose own income is contingent upon collecting debts, can lead to anything from a rising number of complaints to the federal government to consumers exhibiting PTSD-like symptoms that are a direct result of feeling hunted by their collectors. The Future of Collections To combat this, we reimagine the collections experience. That difference comes from placing the consumer at the forefront of our collections strategy; the consumer is given the choice to engage with TrueAccord’s personalized, digital solutions at their own pace.  This strategy empowers consumers to manage their debts in a way that makes sense for them and ultimately affords high customer satisfaction, whereby consumers feel that a weight has been lifted from them when they pay off their debt through TrueAccord.  Machine Learning By automating collections communications, we are able to craft a more personalized experience for our users. With over 6 million users on the platform, we use the aggregate data to better understand what makes each of those users distinct and how to best communicate with each individual that we service. The learning aspect of the platform continues beyond simple understanding; it makes our communication strategies more dynamic and can cater our content and outreach to each user. User Experience For TrueAccord, providing a positive user experience means being transparent and giving consumers the options they come to expect across other financial services. This is best represented by the fact that more than 80% of consumers on the platform are managing their account on mobile devices, not on the phone with agents.  A positive user experience is just as necessary for TrueAccord’s creditor partners which have direct access and visibility into the inbound and outbound activity related to their debts as well as the amounts collected.  Rules, Regulations, and Refreshing the Model Samet recently served as a member of the Consumer Advisory Board of the Consumer Financial Protection Bureau (CFPB) to assist in reviewing current collections rules and regulations using TrueAccord’s data. The CFPB is currently developing legislation that promotes our model; this legislation will severely restrict call center-based collections and will encourage adoption of digital channels instead. With TrueAccord leading these changes, we aim to continue our rapid growth by setting industry standards and making debt collection a more empathetic experience. 

The latest AI in Banking podcast features our CEO Ohad Samet as he talks about personalized messaging, collection forecasting, as well as his thoughts on branding and customer retention. https://soundcloud.com/aiinbanking/machine-learning-for-debt

Establishing a consumer-facing business involves a wide range of steps, which include creating products and services that customers need. There are also essential “behind the scenes” decisions you need to ensure solid financial management of your company. #1: Establish Payment Options There are many ways you can allow your customers to pay you. However, you need to set up accounts to allow you to accept most transactions. Think beyond the basics here. For example, do you wish to offer our customers a way to use automated payments? Perhaps you would like to set up tap and go type payments. Research your potential customers and their preferred payment methods, whether that’s online and/or in person. #2: Get Taxes in Line Now Establish a method for collecting and managing your business's taxes. Do not overlook the importance of having an experienced professional managing the books, so hire an accountant and a bookkeeper to manage your financials for you. A professional can help you navigate through and stay up to date on the complexities of state-specific and federal tax regulations. #3: Establish Payment Requirements In most business to consumer situations, you’ll require payment at the time of service. However, many companies give  credit both in-house and through third party providers. It is important for you to establish any payment requirements, such as how much is due, when it is due, and what happens if nonpayment occurs. #4: Make Payment Easy Having a web portal or an app to properly manage the payment process is a critical factor for most business owners. If you do not have a way for customers to make payments on their account online, you are missing out on a large portion of buyers. Vendors like Square, Stripe and Klarna make it easy for you to accept credit card payments online, and some, including Square and Klarna, as well as Afterpay and Affirm, allow consumers to pay installments over time.   #5: Establish a Collections Plan Although you may not want to think about it, this is a common situation and need in today’s business world. Define what this needs to be—who will handle it, what type of collections activity you will use, and when accounts go into collections. You also want to facilitate a way for your customers to pay for their fees, if applicable. This doesn’t have to be resource-intensive nor hard to do with the right partner. That’s why at TrueAccord, our debt collection platform empowers businesses to easily place their accounts with us and recoup charged off losses.

It’s not easy to make customers happy when you are trying to collect a debt from them, but customer satisfaction is an important component when servicing consumers, even in debt collection. Low customer satisfaction reduces collection rates, increases complaints, and adds to legal exposure. The old days of hitting consumers over the head, metaphorically, with aggressive phone calls is over. There are a few key ways you can turn around customer satisfaction in your collections business to see better results. Why Is Consumer Satisfaction So Low? Within the collections industry, most consumers are angry, frustrated, and even downright unhappy with the service they get from collections companies. Initially, this can seem that these individuals just do not want to pay the bill. Yet, more than often, it is the result of being unable to communicate their needs. Or, they feel as though the person on the other line isn’t listening to them. Sometimes, repetitive phone calls or a lack of information between two parties calling the customer leads to this type of turmoil. Pitting collectors with aggressive quotas against consumers in debt isn't helping, either - and evidently, most compliance violations and complaints come in at the end of the month, when collectors are most stressed out. First, Consider What’s Happening Around Them You cannot make excuses for your customers. You cannot look the other way because they are having a financially tough month. However, it is important to understand what is happening around the customer that could be making hardship difficult. For example, are they struggling due to economic factors in their community or the country as a whole? Understanding why they are where they are can be valuable in helping you to offer a solution that fits their situation. Improve Your Platform Are you using the latest technology and resources to help you connect and remain connected with your customers? It is very common to find yourself unable to provide for the needs of the consumer if you have not done this. And, this can help to improve not just how satisfied your customers are, but also the company’s bottom line. For example, are you able to offer a customized collection process that fits the needs and the behaviors of your clients? Do you need to update your solutions so you can allow your customers more flexibility, more insight, or even the ability to make a payment online? Does your system limit the amount of information that can be shared between parties, making it hard for you to meet your customer’s goals of being able to speak to someone who understands their situation every time? What could more data do to help improve your business and give your team better insight into your customers? Take the time to consider what changes could help improve customer satisfaction within your organization. In many situations, making a change in the way you empathize with your customers as well as understand their needs, can help to improve the experiences you are having. Learn more about the options and opportunities available to you today. When you do, you are sure to find a wide range of opportunities available to make small improvements that can create a better outcome for every customer.