By Katie Neill & Steve Zahn A court victory by TrueAccord Corp. (TrueAccord) in the Northern District of Illinois continues to showcase the benefits of digital collection as the court found receiving an email about a debt is less intrusive to consumers than receiving a phone call. Messer Strickler Burnette represented TrueAccord and filed the briefing in the case. In the Branham v. TrueAccord opinion, the court granted TrueAccord’s motion to dismiss finding that the alleged injuries claimed by the plaintiff—undue stress and anxiety, financial and monetary loss, uncertainty as to how to proceed about the debt, and a harm that “bears a close resemblance” to invasion of privacy—are insufficient to establish standing for a Fair Debt Collection Practices Act (FDCPA) claim. Plaintiff’s Allegations Plaintiff alleged that TrueAccord violated the FDCPA by contacting her twice by email after having received notice that she was represented by an attorney. TrueAccord had no record of receiving a notice of attorney representation from the plaintiff. However, when deciding on a motion to dismiss like this, the court must rely solely on the facts and allegations in the complaint and consider them as true, whether or not they are. In the complaint, the plaintiff included a laundry list of alleged injuries suffered as a result of receiving the two emails from TrueAccord. These injuries included: “Actual” financial and monetary loss without any specifics Confusion on how to proceed with TrueAccord’s debt collection attempts due to “misleading statements” Undue stress and anxiety as well as wasted time, annoyance, emotional distress, and informational injuries A harm that “bears close resemblance to” invasion of privacy Plaintiff Did Not Allege a Concrete, Particularized Injury In its decision, the court shot down each of these alleged harms and found that the plaintiff failed to properly plead a concrete, particularized injury as the U.S. Supreme Court required in Spokeo, Inc., v. Robins.  Specifically, the court found: Unlike telephone calls, two unwanted emails are insufficient to confer standing and wouldn't be “highly offensive” to the reasonable person. Alleged physiological harms (e.g., emotional distress, anxiety, and stress) are abstract harms and not concrete enough to support standing without a physical manifestation of such harms. Vague and conclusory statements that the plaintiff suffered financial harm without any allegations of facts to support that alleged harm are insufficient. Attorney fees for bringing suit on a matter cannot be the sole basis of standing to bring the matter; to do otherwise would permit any plaintiff without standing to create it by retaining counsel. “Wasted time” is not a sufficient harm for standing where no facts are alleged to support the claim. The risk of an invasion of privacy without an actual invasion of privacy is too speculative and not sufficient to confer standing. Sophisticated Omnichannel Communication Strategies This decision is another step forward for the use of email in debt collection as the consumer-friendly way. It also showcases the need for mindfulness when implementing an omnichannel communication strategy. Notably, while the court found a couple of emails are less intrusive than a phone call, it also stated that text messages, voicemail, and calls are different as they “are sufficiently intrusive on an individual’s peace and quiet” to support standing. Using a sophisticated omnichannel strategy helps debt collectors reach consumers at times that are right for the consumer and through the right communication channel, which ultimately creates a non-intrusive consumer experience. Schedule a consultation to learn more about how email and an omnichannel approach can help their business's collection efforts today»»

It’s tax season again, which can mean tax refunds for consumers that have historically been leveraged to stabilize finances or pay down debt. But with inflation and economic stressors persisting into the new year, many consumers are conflicted on their financial outlook and spending behavior is hard to predict. With uncertainties about how the end of various pandemic-era benefits will impact consumers, it’s more important than ever for creditors and collectors to implement strategies that consider consumer situations and preferences when attempting to collect. Read on for our take on what’s impacting consumer finances and our industry, how consumers are reacting, and what else you should be considering as it relates to debt collection in 2023. What’s Impacting Consumers and the Industry? High inflation and interest rates persisted in the first quarter of 2023. While inflation eased for an eighth straight month in February at 6%, price increases rose sharply again on a monthly basis - prices grew 0.4% following a 0.5% increase in January, driven by higher gasoline and rent prices. In response, the Federal Reserve continued its battle against high inflation in March by raising its key interest rate by another .25% despite concerns around the turmoil that has shaken the banking system, landing it at 4.75-5%. At the beginning of March, the federal government ended pandemic-era payments for low-income families on the Supplemental Nutrition Assistance Program (SNAP), causing nearly 30 million Americans to lose increased food stamp benefits. The extended payment boost was credited with keeping 4.2 million people out of poverty, with the average household expected to lose upwards of $95 per month in benefits with the program’s end. In early Q2, another pandemic-era benefit around Medicaid will come to an end that will impact millions of consumers over the coming months. An estimated 15 million low-income Americans who were able to keep Medicaid coverage during the pandemic without needing to renew coverage or despite no longer qualifying will find themselves without health insurance. The Department of Health and Human Services estimates that in the end, more than 5 million children will have lost Medicaid, and predicts that Latino and Black beneficiaries will be disproportionately removed. On the regulatory front, the Consumer Financial Protection Bureau (CFPB) hit the ground running for 2023 with new guidance on subscription fees, proposed rulemaking on non-bank company terms and conditions, and issued an annual report sizing up the three credit reporting companies. Directly impacting creditors and debt collectors, a January ruling from the District Court of Puerto Rico found that sending debt collection communications prior to any knowledge of a debtor’s bankruptcy filing is not a violation of the Fair Debt Collection Practices Act (FDCPA). For businesses using pre-recorded messages to contact consumers, the Federal Communications Commission (FCC) published a new rule specifying that to be exempt from the Telephone Consumer Protection Act’s (TCPA) consent requirements, callers are limited to three pre-recorded non-commercial, non-telemarketing, or non-profit calls per 30 days, and would need to include an opportunity to opt out of prerecorded calls as part of the message. The final amended rule will go into effect on July 20, 2023. Meanwhile, eyes are on the Big Apple as the New York Department of Financial Services (DFS) and the New York City Department of Consumer and Worker Protection are simultaneously engaged in amending their consumer debt collection rules. The DFS amendments would be an overhaul of its existing regulations and would include new debt types, while both amendments would introduce new disclosure requirements and additional restrictions on communications – specifically extending the existing requirement for direct consent to send email and text messages. Key Indicators and a Heavyweight Court Decision According to the New York Fed’s Quarterly Report on Household Debt and Credit, total household debt increased in the fourth quarter of 2022 by $394 billion (2.4%) to $16.90 trillion. Balances now stand $2.75 trillion higher than at the end of 2019, before the pandemic. In the same time period, the Federal Reserve reported that household net worth rose 2% to $147.71 trillion, driven by the value of equities holdings increasing $2.7 trillion offsetting a drop in real estate values by about $100 billion. Consumers trying to make ends meet have continued turning to credit cards and other credit types to bridge the income to expense gap. According to the Federal Reserve Bank of New York, U.S. consumer credit card debt has increased to nearly $1 trillion. Credit card balances jumped more than $60 billion over Q4 2022, lifting the total amount of U.S. credit card debt to an all-time high of $986 billion, the report found. Home equity loans and lines of credit continue to be an attractive option to homeowners, though high interest rates may make opening a new account less appealing in 2023. Diving deeper into credit cards, Experian’s March Ascend Market Insights report found that credit card balances, while slowing slightly from previous months as seasonally expected, were up 18.8% year over year in February 2023. Additionally, the report found that there were 7.2% more open credit cards in February than there were a year prior. These balances and new cards coincide with an increase in interest rates, raising the stakes for delinquent accounts. According to a January 2023 Bankrate survey, 35% of Americans carry credit card debt from month to month, up 6% from 2022. And delinquency is trending. Experian also reports that early-stage delinquency is nearing or exceeding pre-pandemic levels for most credit products, with exceptions for first and second mortgages, Home Equity Lines of Credit and student loans. 30+ day past due accounts showed a 2.12% increase month over month in February, while 90+ days past due unit delinquencies for auto loans and personal loans are higher than they were in 2019. Additionally, roll rates show 1.06% of consumer accounts rolled into higher stages of delinquency in February. Revolving credit utilization continues to slowly increase, as well. The same month, 63% of consumers had utilized 20% or less of their revolving limits, while 21% of consumers had utilization of 60% or more. The student loan forgiveness debate continues into 2023 as the nearly 19% of Americans with student loans wait to see how the case shakes out with the Supreme Court. If successful, many consumers will see their overall debt burden decrease. If unsuccessful, those consumers will see no reduction in their debt and will be responsible for resuming payments that were deferred or went into forbearance during the pandemic. A ruling is expected sometime in Q2 2023. While student loan delinquency rates have been almost nonexistent since payments were paused, the delinquencies in mortgages, auto loans and credit cards have been trending back to pre-pandemic levels, which doesn’t bode well for student loan holders with other debts. When student loan payments resume, consumers will have to prioritize debt repayment, leading to higher delinquency rates for other debt types. For a data-driven look into this topic, read our latest report, “Consumer Finances, Student Loans and Debt Repayment in 2023”.  Consumers Sending Mixed Signals About Finances As the cost of living remains high, 62% of Americans said they are living paycheck to paycheck in February, up from 60% the month prior, according to the latest Paycheck to Paycheck Report from PYMNTS.com and LendingClub. According to Deloitte’s State of the Consumer Tracker, consumers are feeling slightly more optimistic about their personal finances and the direction of the economy, but are also signaling stronger intentions to save versus spend.  But Bankrate’s 2023 Annual Emergency Savings Report shows that growing debt is hurting consumers’ ability to save, with 36% of Americans reporting having more credit card debt than emergency savings, the highest on record since 2011. The report shows that consumer concern about finances is high, with 68% of people surveyed worried they wouldn’t be able to cover their living expenses for one month without their primary source of income, including 85% of Gen Zers — the most concerned of any generation. Unsurprisingly, 74% surveyed said economic factors, inflation and changes in income and employment are causing them to save less right now. What Does This Mean for Debt Collection? So far in 2023, the economic landscape isn’t cutting consumers any breaks. With persistently high inflation and interest rates, the impending threat of a recession and a number of pandemic-era benefits coming to an end, consumer finances will likely be impacted and stretched in myriad ways this year. For lenders or collectors engaging with distressed borrowers, here are a few things to keep in mind: 1. Meet consumers where they are, compliantly. While regulations and compliance impacted both phone calls and digital channels in some way in 2022, our takeaway is that a one-size-fits-all approach to debt collection communication won’t work at scale in 2023. By using an omnichannel approach, collectors are more likely to engage a customer on their preferred channel and open the door for engagement. For a closer look at what using an omnichannel approach means in debt collection, check out our latest eBook. 2. Give consumers agency to engage on their own time. What do emails and online payment portals have in common? Consumers get to decide when and where they use them. Just because a call center operates from 9-5, doesn’t mean consumers do. Remember that everyone’s situation is different, including when they can (or want) to address their debt.  3. Give consumers flexibility on repayment time and terms. Higher monthly financial obligations make it harder for consumers to absorb unexpected expenses or carve out funds for debt repayment. Patience will be key in engaging distressed borrowers - give them payment plan options for when and how much they repay, which could mean smaller payments, shifting payments to align with their cash flow schedule or skipping a payment without penalty so they can get back on track.

Reaching consumers can feel harder than ever these days, so struggling to engage delinquent customers can leave some businesses ready to accept losses as just another “cost of doing business." With 75% of Americans reporting that they will never answer calls from unknown numbers, even the most targeted scoring model for calling has low chances of recovering funds. But the omnichannel approach—utilizing a combination of calling, emailing, text messaging, and even self-serve online portals—is the preferred experience for 9 out of 10 customers, according to a study conducted by UC Today. And it’s not just beneficial for consumers. The omnichannel approach has been shown to increase payment arrangements by as much as 40%! So integrating an intelligent digital communication strategy with traditional call-and-collect or letters sounds like a smart plan, but why is it more important now than ever before? Let’s look at why today’s economic landscape makes omnichannel engagement critical for collections and how your business can get there. Delinquencies are Rising—And Call Centers Can’t Keep Up The first quarter of the year revealed that Americans have almost reached $1 trillion in credit card debt, breaking a record set in 2019. Fueled by inflation and higher interest rates among other economic factors, some card issuers’ charge-off and delinquency rates are also rising back up to their pre-pandemic levels. So we know that delinquencies are on the rise in addition to new compliance regulations that have put greater restrictions on calling (such as the inconvenient times rule, 7-in-7 rule, among others), which put greater limitations on the reach call centers can actually have. Even using scoring models to focus on those who have the highest propensity to pay, consumer preferences have moved away from engaging through (or even answering) the phone. Even if you know which delinquent accounts are primed for repayment, old school methods will never be able to reach them all efficiently in comparison to digital engagement. On top of that, consumers are typically already carrying out financial transactions online—so why would a business expect their preferences to shift offline when it comes to handling another financial interaction? When a customer defaults on their account, it is a disruption to their lives to suddenly receive phone calls and letters regarding an account for which they previously only communicated via digital channels. From our own experience, many of TrueAccord’s creditor-clients prefer a seamless transition to debt collection, and will even go so far as to prohibit TrueAccord from making any outbound calls or sending letters on their accounts because their customers have only ever interacted digitally. It can even stifle the flow of information that helps consumers make informed decisions about their finances. According to the Pew Research Center, “reliance on smartphones for online access is especially common among younger adults, lower-income Americans and those with a high school education or less.” In fact, 87% of TrueAccord consumers visit our web portal from their mobile devices and tablets, not their desktop computers. Choosing not to engage via digital methods can hurt vulnerable populations of consumers who primarily conduct most of their affairs digitally. But the answer to this challenge isn’t going 100% all-in on digital communications necessarily. There’s a better way to reach past-due customers and collect more, faster (and from happier people). Enter the Omnichannel Approach We’ve seen that call-and-collect operations have proven less successful over time, even using propensity to pay scoring models, but there is a time and a place for those traditional methods in an omnichannel strategy. Adding different technologies to your debt collection operation like email, SMS, and even self-serve online portals can actually enhance the hard work your call centers are already doing and make it overall more effective. Why is the use of different channels—and more importantly a customer’s preferred channel—so critical for today’s debt collection efforts? The numbers speak for themselves: 46% of consumers expect to communicate through preferred channels Initiating contact with delinquent customers through their preferred channels can lead to a more than 10% increase in payments Some banks have found digital communication channels can increase payment rates of customers in late delinquency by 30% Lenders that have implemented digital-first solutions have seen their cost of collections fall by at least 15% Traditional outreach methods like outbound calling elicited 18% fewer responses from customers with accounts 30 days past due who prefer digital communications. The key takeaways from these studies go beyond just “going digital”—to see improvements in engagement rates, repayments, and operational costs you must communicate through the consumer’s preferred channels. At TrueAccord, we’ve seen this approach’s success time and time again for our own clients and their customers. Statistics and Stories from the TrueAccord Omnichannel Strategy Almost all TrueAccord communications with consumers (93%) happen electronically with no agent interaction. The remaining 7% of consumers who do interact with an agent, send an inbound email or make a phone call to our inbound call center where any of our customer care agents are prepared to assist with their request. This is a more cost-effective and efficient use of agents’ time versus making outbound calls, which benefits both businesses and their customers, as one consumer told us on June 1, 2022: “Thank you for not calling a million times and texting me and allowing me to pay this when I could.” As described above, TrueAccord primarily sends digital communications to help consumers navigate and take actions at their convenience online, as this consumer told us on January 18, 2023: “I like how you explain everything in detail by email and easy payment plans for people to regain their credit scores and to get back on their feet.” In fact, more than 21% of consumers resolve their accounts outside of typical business hours (before 8am and after 9pm) when it is presumed inconvenient to contact consumers under the federal Fair Debt Collection Practices Act (FDCPA). If we relied solely on reaching consumers during a call center’s business hours, that is almost a quarter of consumers who wouldn’t engage and take the next steps in their repayment process. Our omnichannel approach is compelling for our clients as well—and it’s proven to pay off. As Todd Johnsen, Senior Manager of Collections Vendors for Snap Finance, explained: “This audience [consumers in debt] may have already had experiences with incessant collection phone calls, and they are used to avoiding them. I wanted to find an agency that was doing things differently. I knew that TrueAccord was using technology and digital channels in a way that other providers weren’t. What we saw was almost 25-35% better performance with TrueAccord, compared to the accounts we placed with traditional agencies.” See what other clients and consumers had to say about their debt recovery experiences with TrueAccord in our case studies and resources here»» The Recovery Opportunities are Ripe with the Omnichannel Approach Omnichannel targeting is a more effective way of maximizing repayment and conversation rates by offering a level of service and personalization that customers have come to expect from companies in the digital age. With this holistic communication strategy, you can engage with every single account while call center agents still deliver the human touchpoint that can never fully be replaced. Reach customers with the right message, through the right channel, at the right time that works best for them—whether through email, text, or with a real person ready to guide customers back to financial health. Creating an effective omnichannel strategy can seem complicated, but it’s not with the right experienced partner. Schedule a consultation to discover our early-stage collections solutions and late-stage collection services!

The economy took a wild ride in 2022, and with interest rates continuing to rise, inflation expected to remain relatively high and household savings dwindling, 2023 could be just as challenging. As consumers battle high inflation and interest rates to afford necessities, budgets will be stretched and many will have to prioritize when and where they spend. Unsurprisingly, paying off debt will likely take a back seat to food, housing and transportation needs. But what will that mean for lenders and creditors? In order to construct a comprehensive picture of the financial landscape for consumers with debt in delinquency, we analyzed data of thousands of consumers in debt collection to explore how they are positioned to handle financial stressors as well as how different financial burdens impact the repayment ability of consumers in debt collection, especially for those with student loans in this tumultuous economy.  Key Takeaways from the Report: Economic indicators show a rough road ahead for consumers Resumed student loan payments will impact ability to pay debts - consumers with student loans have an average of $11,373 in non-student loan debt, or 92% more than consumers without student loans ($5,917) Student loan holders increased their average number of open trade lines by 10.3% since 2020, while open trade lines decreased by 7.7% for non-student loan holders Consumers with student loans have an average of $811 more in auto loan debt than those without student loans as of 2022 Engaging consumers with multiple debts requires understanding, personalization and patience in 2023 Download and read the full report for more insights.

More than 20 million US households are behind on their utility bills, according to the National Energy Assistance Directors Association (NEADA), which described it as the worst crisis it has ever documented. Delinquencies are rising across all industries, but utility debt specifically has doubled from pre-pandemic levels, and as moratoriums ended customers faced the onslaught of unpaid bills. So how can utility providers (or any company facing a rise in delinquencies) collect on past-due balances while still helping struggling customers get back on their feet since the moratoriums lifted?  It starts with understanding today’s financial landscape and refining your debt recovery outreach to meet customers when, where, and how they can best get back on the path to financial stability. Let’s look at how serious the current situation is for utility debt and the recovery strategies to keep bad debt from rolling into uncollectible write-offs. A Historic Situation for Utility Providers and Consumers  Having customers behind on payments is nothing new for utility providers: before Covid-19 Americans had about $8 billion in utility debt, but today this number has doubled to $16 billion with high energy prices and pandemic-related job loss as major contributing factors to the jump.  In March 2022, overall energy prices increased 32% over the previous 12 months, according to the NEADA. The Bureau of Labor Statistics broke this down even further, finding the price for natural gas rose 21.6%, electricity up 11.1%, and heating oil and propane up 70.1% within the same timeframe. Utility providers across the country are seeing the effects of this multifaceted issue: California’s PG&E Corp. reported more than a 40% jump in the number of residential customers behind on payments since February 2020 Minnesota's CenterPoint Energy and Xcel Energy experienced more than 246,000 customers behind on their bills in February 2022 New Jersey’s Public Service Enterprise Group saw the total of customers at least 90 days late rose more than 30% since February 2020 And in New York more than one million households have fallen delinquent with at least $1.7 billion owed in unpaid energy and utility bills since the start of the pandemic Facing this historic situation for both residents and utility providers, what can companies do to both recover the overdue balances and ease some of the stress on consumers?  How to Help Customers and Collect More in the Process—A Real World Example with Real Results While overdue and unpaid bills are not unexpected, there was no way any company could predict the unprecedented toll from the pandemic: the average balance owed has climbed 97% since 2019, according to NEADA. But the pandemic did illuminate how well customers respond to digital communications and self-serve options for their utilities. One of our TrueAccord clients, a national leader in electric utility systems, realized this firsthand after the moratoriums began to lift—and after making the switch from traditional collection practices to a digital-first omnichannel approach, the utility provider recovered over $17 million with TrueAccord’s intelligent client-labeled early-stage recovery platform. Historically, this electric utility provider relied on direct mail and an in-house call center to contact customers with overdue accounts. But during Covid, the provider saw engagement and revenue decline using these old methods, due in part to changing customer behavior. It was time to find a new effective and customer-friendly way to collect on growing delinquent utility bills.  The electric utility provider had already observed that its customers were becoming more digital, from engaging with its distribution companies’ mobile apps to using online outage maps and bill pay tools—and the trend only seemed to be picking up during the pandemic.  The utility provider decided to deploy a digital outreach strategy to drive customer engagement and resolution through TrueAccord’s early-stage collections platform. Every email goes out under the provider’s brand name, but under the hood, HeartBeat—TrueAccord’s patented machine learning engine—dynamically optimizes every digital touchpoint in real-time based on signals of engagement. It also helped the provider boost the efficiency of their call center: instead of trying to get delinquent customers on the phone through outbound dialing, contact center agents can work as productive inbound solutions specialists.  And the utility company saw a transformational financial impact: Recovered over $17 million Collected over 63,000 payments $300,000 of delinquent funds collected daily  44% paid in full rate 24% overall collections rate  Ultimately, TrueAccord enabled the company to deliver an effective and empathetic approach to collections—one that is sure to transform the utility provider’s relationships with its customers.  Read the full case study here»» Effective, Efficient, Empathetic—Keys to Better Collections in Utilities  Both providers and their customers are facing another wave of unprecedented conditions when it comes to utility debt, but new digital-first omnichannel collection strategies can hold the keys to better recovery.  Discover how your company can start collecting faster from happier customers, schedule a consultation today»»

Businesses and consumers are buckling up for a bumpy economic road in 2023, but your company doesn’t have to accept that these recovery roadblocks spell inevitable losses. With the right digital communication strategy you can turn challenges into opportunities and engagement into recovered revenue. Let’s look at the roadblocks—and uncover the opportunities. The Roadblocks Between Your Business and Better Recovery  Delinquencies have been rising (and show no signs of slowing down). According to the latest Experian’s Ascend Market Insights report released in January 2023: Overall balance delinquency rates increased 6.88% in December 30+ day past due accounts showed a 3.94% increase month over month Month over month views of roll rates show 1.05% of consumer accounts rolled into higher stages of delinquency in December 2022 And looking ahead, TransUnion forecasts serious delinquency rates of 2.6% on credit cards by the end of 2023, up from 2.1% at the end of 2022. Additionally, it’s no secret that consumer preferences have changed. It's becoming nearly impossible to reach consumers through traditional methods like outbound calling and letters. 94% of unidentified calls go unanswered 49.5% of consumers take no action after a collections phone call But now “going digital” isn’t enough—consumers expect self-service, a dynamically personalized experience, and continuous optimization that helps them resolve debt on their own terms and according to their own preferences. 46% of consumers expect to communicate through preferred channels 72% of consumers say they only engage with personalized communications 90% of customers globally expect brands or organizations to have an online self-service support portal Turning Roadblocks into Omnichannel Opportunities These ongoing trends could be perceived as challenges, and as a result, many businesses accept losses as a “cost of doing business”—but with the right strategy these roadblocks can actually be opportunities to drive optimization and better engagement. If your business has been relying on only call center operations, it’s time to shift gears and move to an omnichannel approach—a more effective way of maximizing repayment and conversion rates by offering a level of service and personalization that customers have come to expect from companies in the digital age. An omnichannel strategy facilitates engagement with customers and enables them to self-serve while freeing up agents to talk to customers that need more assistance. McKinsey found in a study of 1,000 delinquent customers that digital channels such as emails and text messaging drove higher repayment action rates vs traditional channels, like outbound calling. In some cases, traditional outreach methods elicited 18% fewer responses from customers with accounts 30 days past due who prefer digital communications. And the benefits of communicating with consumers digitally continues: 65% of consumers open at least one email 35% click at least one link in an email 25% visit links after 9PM and before 8AM “presumptively inconvenient times” And predictions show that 61% of total interactions with a brand will be through messaging by the end of 2023 At TrueAccord, we’ve found that 96% of consumers who resolve their debt with us do so via digital self-service, without any human interaction. But don’t just take our word for it: “This audience [consumers in debt] may have already had experiences with incessant collection phone calls, and they are used to avoiding them. I wanted to find an agency that was doing things differently. I knew that TrueAccord was using technology and digital channels in a way that other providers weren’t. What we saw was almost 25-35% better performance with TrueAccord, compared to the accounts we placed with traditional agencies.” Todd Johnsen, Senior Manager of Collections Vendors, Snap Finance Navigate 2023’s Roadblocks with Your Roadmap to Better Recovery While the economic landscape may seem like there’s a rocky road ahead, consumers aren’t taking an entirely negative outlook. According to TransUnion's Consumer Pulse study, 52% of U.S. consumers said they are optimistic about their financial future during the next 12 months. Now is the time to focus on creating a better experience and supporting consumer optimism about their road to financial health. Discover your own path to helping customers move into repayment with our new eBook, Your Roadmap to Better Recovery in 2023 - available for download now» Ready to get started? Schedule a consultation today!

At TrueAccord, our goal is to meet customers where they are to personalize a strategy for each individual customer. We do this by sending them a communication via the right channel, using messaging that resonates with them, and making them an offer they can afford. We’re able to achieve this thanks to insights from the 20 million customers. This includes data like what email and SMS messages drive the most engagement, which web pages are customers viewing the most, what is the ideal payment plan length, as well as where and when customers stop engaging with us. With every insight, we’re able to improve the overall consumer experience and help keep customers get back to financial health (and recover more efficiently and effectively in the process). The Resolution Funnel A funnel is built using a lot of data and a lot of consumer insights. It helps organize that data into a view of the customer's journey within our product and allows us to identify areas where we can concentrate product improvements. Whether that’s making the website more user-friendly, promoting new and different channels, or utilizing our patented machine learning models—each is a different lever or strategy we can use at different stages of the funnel. At TrueAccord, our funnel is tailored to fit our business needs while still getting all the benefits of understanding our customers' behaviors to move them through the funnel, in our case to resolve their debt. Here’s an example that gives you a good picture of how we think about the customer journey. We have two different funnels for two different clients we work with. You can see they’re fairly different in shape. At the top of the funnels you can see all of the debts placed. Next is reachability, which looks at how the customers were reached, and then if the customers acknowledged their debt, all the way down to when they resolved their debt. These funnels show that for Client 1 we should concentrate our improvements at the top of the funnel, while for Client 2 we need to look at improvements at the bottom of the funnel. We can slice and dice the funnel in different ways to see how different customer segments are performing. This helps us identify what is working for different consumer segments and for different clients so we can see on a granular level what stages of the funnel to lean into to improve performance specifically for them. Top of the Funnel When planning strategies that will improve performance and customer experience at the top of the funnel, it’s important to make sure that the contact information for a customer is correct and that content is personalized in order to get engagement. The stages that make up the top of the funnel are: Debts Placed, Reachability, and Acknowledgment. Debts Placed: All of the debts that are placed with the company. Reachability: For the reachability stage, the goal is to reach the consumer and make sure that they’re receiving communication efforts which could be something like a customer opening one email. Acknowledgment: This could be clicking on an email or SMS and visiting the company’s website, but it could also be from an interaction with customer support via phone or email. Middle of the Funnel The two stages we consider the middle of the funnel are: Active Consideration and Commitment. This is where the customer considers the options they have, chooses one, and then commits to a payment arrangement. By providing an online platform that’s easy to use and navigate through filled with helpful content, customers are more likely to self-serve. Active Consideration: A customer visiting a payment form on the website or having the intent to pay. Commitment: A customer signing up for a payment plan or agreeing to any other type of deferred payment. Bottom of the Funnel Lastly, we’ll cover the two bottom-of-the-funnel stages which are: the Progression and Resolution of the debt. In these stages, it’s essential to have a plan management system in place to help customers keep up with their payments as well as a plan in case they fall off and stop paying. The funnel ends once the customer passes through these last two stages and has paid off their debt. Progression: A customer paying a portion of their balance either through partial payments or payment plans. Sometimes this stage is skipped if the customer pays in full or in a lump sum payment. Resolution: The last stage of the funnel, where a consumer satisfies their agreement through paying in full, settling, or filing a valid dispute. Effective Recovery Through the Resolution Funnel The more you listen to your customers through their usage and their behavior, the more you can learn and improve your digital collection strategy. Funnels can be an effective tool when you’re trying to improve your performance and customer experience, which are key factors to getting customers through to repayment. It helps you segment customer groups and define how they move through your system and products so that you can focus your collection strategies on where they matter most. Watch the full Resolution Funnel webinar on-demand to learn more about how TrueAccord gets insights on funneling customers through each phase of the repayment process. Interested in seeing how you can funnel more customers through the repayment process? Schedule a consultation today!

In 2022 we started to see the toll inflation and economic stressors are taking on consumer finances. Inflation remained a top concern as the Fed tried to rein it in with rate hikes, and the higher costs and interest rates may have caused consumers to stretch their budgets as far as possible (or farther - holiday spending, anyone?), leading to a precarious financial outlook in 2023. As we start the new year with the continued threat of a recession and a shrinking employment market, building strategies that take consumer situations and preferences in mind is key, and of course, finding ways to work with distressed borrowers is the best path forward. Read on for our take on what’s impacting consumer finances, how consumers are reacting, and what else you should be considering as it relates to debt collection in 2023. What’s Impacting Consumers? Compounding inflation and higher interest rates continued to be hard on consumer finances in Q4 of 2022. Inflation has been slowing, but still came in up 6.5% year over year in December, dropping 0.1% from November and driven by lower fuel costs. Food and housing inflation continue to rise at 10.1% and 8.1% annually respectively, and gasoline prices in January have already been rising. Interest rates sit between 4% to 4.25% after the latest 50 basis point rate hike, and the Fed projects raising rates as high as 5.1% (raised from a 4.6% projection in September) before ending the campaign to beat inflation. According to Moody’s, while higher-income households saved more during the pandemic and are far less sensitive to rising prices, lower-income families are bearing inflation costs unequally and drawing down excess savings more quickly. Households earning less than $35,000 annually saw their excess savings shrink the most out of all income cohorts — their excess savings depleted by nearly 39% from Q4 2021 to Q2 2022 and was expected to run out by the end of the year. Tasked with making ends meet and running out of savings, many consumers have turned to credit cards for extra funds. Credit card balances continued to climb for the ninth month in a row in November, up 16.9% year over year. According to Experian’s November Ascend Market Insights, there were 6.2% more open credit cards in October than there were a year prior and 11.1% more than at the end of October 2019 (pre-pandemic). Read: more credit cards with higher balances.  And many of those credit cards belong to subprime borrowers who are more financially at risk to inflationary pressures and unexpected expenses. Equifax data reported by Bankrate shows that about 3.95 million traditional credit cards had been issued to subprime borrowers (consumers with a VantageScore 3.0 below 620) in Q1 2022, jumping by 18.3% and representing an overall credit limit of $3.29 billion, compared with the same period in 2021. And those balances will get more expensive as interest rates go up. According to Bankrate, credit card rates have risen to the highest levels ever since it began measuring the data in 1985, with today’s average annual credit card rate at 19.42%. Credit cards aren’t the only option - consumers have other ways to access credit like personal loans and home equity lines of credit (HELOC). But these products are showing similar use trends, too. TransUnion reports that as of Q3 2022, 22 million consumers had an unsecured personal loan, the highest number on record, while total personal loan balances in the same quarter continued to grow, reaching $210 billion – a 34% increase over last year. Similarly, Experian reports that HELOC balances grew by 1.5% after increasing over 9 of the last 12 months. With HELOC originations down, the increase in balances is attributable to homeowners tapping into existing lines of credit as the cost of living rises. Higher prices didn’t stop the holiday shopping - holiday sales rose 7.6% last year despite inflation, and much of that was online. Consumers spent a record $9.12 billion online shopping during Black Friday and another record $11.3 billion on Cyber Monday. Buy Now, Pay Later (BNPL) products, which help consumers with flexible payment plans, played a big role. From Black Friday through Cyber Monday, BNPL payments through leading providers jumped 85% compared with the week before, according to the most recent data from Adobe, with corresponding BNPL revenue rising 88% for the same period. Key Indicators and a Big Unknown According to the New York Fed’s Quarterly Report on Household Debt and Credit, total household debt increased by $351 billion (or 2.2%) during the third quarter of 2022. Household net worth, which showed a record loss in Q2, continued to decrease in Q3 by another $392 billion (.3%). The value of equity holdings dropped $1.9 trillion and the value of real estate held by households only increased $820 billion. Financial pressures mean consumers have less, if any, to save. The U.S. savings rate fell to a 17-year low in October, with the personal savings rate as a share of disposable income dropping to 2.3%. The latest Paycheck-to-Paycheck Report from PYMNTS and LendingClub shows that in November 2022, 63% of U.S. consumers were living paycheck to paycheck, a 3% rise from October. Spending more and saving less means many Americans may be at risk for financial hardship in 2023.  Unsurprisingly, delinquencies are on the rise. According to Experian’s November Ascend Market Insights, there have been increases in 30+ days past due unit delinquency rates for six consecutive months, with those accounts showing a 3.28% increase month over month in October. This goes for both early-stage delinquencies, which are nearing or exceeding pre-pandemic levels for automobiles and unsecured credit products, and 90+ days past due delinquencies for auto and personal loans (higher than pre-pandemic). Experian’s data on overall roll rates also show that 1.32% of consumer accounts rolled into higher stages of delinquency in October 2022, representing the highest level of that metric since February 2020.  But delinquencies haven’t peaked yet. TransUnion’s 2023 forecast, based on its latest Consumer Pulse Study, projects that both credit card and personal loan delinquencies will rise in 2023 from 2.1% to 2.6% and 4.1% to 4.3% respectively. If those projections come to bear, it would represent a 20.3% year-over-year increase in delinquent accounts. According to the report, Americans took out a record $87.5 million in new credit cards and $22.1 million in personal loans in 2022. The big unknown around student loans will impact many consumers for better or worse. As President Biden’s student loan forgiveness program meets legal challenges, tens of millions of Americans wait to see what it means for them. If successful, many consumers will see their overall debt burden decrease, which may help stabilize finances. If unsuccessful, those consumers will see no reduction in their debt and will be responsible for resuming paused payments, which may further stress their financial situation. We’ll find out sometime in Q1 or Q2 of 2023, but the result will likely have a big consumer impact either way. Consumers Are Worried About Inflation and Credit Cards How are consumers feeling about the economic landscape and their personal finances? TransUnion’s Consumer Pulse Study reports that 54% of consumers said their incomes weren’t keeping up with inflation, while 83% said that inflation was one of their top three financial concerns for the next six months. But despite concerns about rising prices, more than half (52%) of Americans said they felt optimistic about their household finances for the upcoming year, even though 82% of consumers believe the U.S. is currently in or will be in a recession before the end of 2023. All those new credit cards are causing some concern for consumers, as well. An early December survey from U.S. News & World Report shows that more than 8 in 10 Americans who have credit card debt are experiencing anywhere from a little to a lot of anxiety about it. An overwhelming majority of respondents (81.6%), all of whom have credit card debt, express some degree of stress about it – from a little bit (33.1%) to a medium amount (27%) to a lot (21.5%). The combination of rising costs and insufficient income was the most common reason given for having credit card debt, with unexpected expenses a close second. What Does This Mean for Debt Collection? As consumers wake up in 2023 with a holiday shopping hangover and bills to pay, the economic landscape isn’t going to cut them any breaks. Consumers will have to prioritize what they can pay and when, which means repaying some debts may get moved to the back burner while food, housing and other basic needs are addressed. Will delinquencies rise as expected? Will consumers turn to more credit cards or BNPL for a stopgap? What happens to overall debt burden with all the unknowns? We’ll soon find out, but as a lender or collector, here are some things to consider: Make it easier to engage. On their preferred channel, at a convenient time, with all the information they need is the best way to engage consumers. Bonus points if they can self-serve on their own time. Make it easier to pay. Paying in full may be impossible for many people with tight budgets, and offering flexible payment plans or removing minimum payment requirements may make debt easier to tackle. Self-serve online payment portals are a win/win for your business and your customers. Make it more empathetic. Balancing finances and being in debt is hard, and people are doing their best to keep up. Understand that you may not recover past due balances immediately and it may take time and patience. In addition to when and where, reconsider how you’re speaking to consumers and you may be surprised at how empathy drives engagement. Need proof? See how customers responded to TrueAccord’s digital approach to debt collection in our 2022 Year in Review.

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 MessageAs 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 ChannelEngage 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 TimeMinimize 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» Not sure if strategizing to engage your customers is the right New Year’s Resolution for your business? Just look at how customers responded to TrueAccord’s customer-friendly, digital approach to debt collection in our 2022 Year in Review and schedule a consultation today to get started!

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! The End-Product: 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. Want to learn more about how your business can integrate more empathy into your collections communications? Schedule a consultation today!