Outbound calling has been the main mode of collections for decades, but the cost of a call center or in-house full-time employees (FTEs) making calls is no longer justifiable when most consumers simply don’t answer the phone, on top of the mounting compliance restrictions limiting opportunities to call in the first place. But outbound dialing isn’t completely obsolete—digital-first omnichannel strategies can turn traditional call-and-collect operations around by integrating new digital channels into the communication mix. Let’s compare traditional outbound calling methods versus a digital-first approach in three key areas impacting your business’s ability to collect more, faster: COST COMPLIANCE CONSUMER PREFERENCES Get even more statistics and data in our latest eBook — Why Evolve from Outbound Calling to Omnichannel Engagement? Cost, Compliance, & Consumer Preferences — available for download now»» COST: Call-and-Collect The cost to collect has been on the rise for traditional methods for years, whether you outsource to a call center or have FTEs dialing the phones. One reason for this rise is based on the fact that many lenders still practice old strategies to prioritize contacting customers based on their risk profiles, balance, and average days delinquent—completely missing portions of their portfolios. Factoring in propensity to pay is important to successful engagement, but it means that agents’ time is focused on only a small portion of accounts, leaving potential repayments on the table. Add in the overhead costs, inflation, and hiring challenges of using agents as first attempts at engagement and watch the expenses continue to climb past what you’re able to collect through outbound calling. COST: Digital-First Omnichannel Right off the bat, digital-first shows the cost of collections can fall by at least 15%. Since digital is infinitely scalable, this communication tactic can touch every single account, regardless of scoring models—unlike human dialers who can only physically call a certain number of accounts on any given day. Going digital-first cuts down on the time billed for making repeated outbound calls that are never answered or returned, and it allows agents to interact with customers that want to speak directly to a person. Overall, digital-first has shown to boost customer engagement by 5x, the first step towards repayment. COMPLIANCE: Call-and-Collect It’s no secret that it’s increasingly complicated to reach customers with all the legal communication restrictions. While all debt collection communication is subject to compliance rules, outbound calling has specific laws and regulations that can carry costly penalties for non-compliance—and it’s only becoming more complex with new state-specific rules rolling out right and left. But no matter where your business is doing business, if you’re making collection calls you must follow these federal guidelines: Inconvenient Time Rule: prohibits calling before 8am or after 9pm Regulation F’s 7 and 7 Rule: Cannot call more than seven times within a seven-day period Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) tagging legitimate businesses as spam FCC Orders further restrict dialing to landlines and include opt-out requirements for prerecorded voice messages But there is a more streamlined way to ensure your collection communications are following all the rules: enter code-based compliance. COMPLIANCE: Digital-First Omnichannel Code-based compliance works by programing rules that ensure all communications fall within all federal and state laws and regulations, such as: Frequency and harassment restrictions Consent requirements* Disclosure requirements This digitally designed approach to compliance greatly reduces the opportunities for human error that are bound to occur in more manual processes. Additionally, the digital-first approach allows companies to continue to collect during times that calling would violate certain regulations, like the Inconvenient Time Rule. In fact, 25% of payments come in after 9pm or before 8am (the determined inconvenient times), since these hours can actually be more convenient for consumers to catch-up on digital communications they received throughout the workday. *Generally, there is no requirement in the federal law to send debt collection communications by email, though some states are more restrictive. This is not legal advice, please consult an attorney for guidance on your unique circumstance. CONSUMER PREFERENCE: Call-and-Collect 46% of consumers want to be reached through their preferred channels—so what are today’s consumers’ preferences? Here’s a hint: phone calls aren’t at the top of the list. And today’s Right Party Contact rates show it, ranging between just 0.5% - 4.0%. And out of those that do answer the phone, 49.5% of consumers take no action after a collection call. The old call-and-collect tactic may actually do more harm than good if compliance rules are ignored: out of the communication tactic complaints received by the CFPB in 2020, over half complained of frequent or repeated calls. CONSUMER PREFERENCE: Digital-First Omnichannel So if phone calls aren’t consumers’ preferred method of communication, then what is? For 59.5% of consumers, email is their first preference when it comes to debt collection communications. This is especially important considering that first contacting a customer through their preferred channel can lead to a more than 10% increase in payments. This digital preference isn’t surprising since nearly nine in ten Americans are now using some form of digital payments—why would they expect collections to be any different? 14% of bill-payers prioritize payments to billers that offer lower-friction payment experiences, and digital is often preferred because of it. Digital communications are easily controlled by consumers and are tightly managed by service providers with built in mechanisms to prevent harassment (like with code-based compliance), which we know has historically been a challenge for call-and-collect practitioners. Digital-First is the Future of Collections And it’s here today, working for TrueAccord clients and customers. At TrueAccord, we find that more than 96% of customers resolve debts without any human interaction when digital options are offered—reducing costs associated with outbound calling, lowering risks with code-based compliance built in, and delivering an experience that consumers prefer. Get even more statistics and data in our latest eBook — Why Evolve from Outbound Calling to Omnichannel Engagement? Cost, Compliance, & Consumer Preferences — available for download now»» Ready to go digital-first with your debt recovery operations? Schedule a consultation to get started today!

Over the past two years, revolving credit card balances have grown more than 25% and are now above $1.2 trillion. Additionally, personal savings rates are stubbornly holding near 65-year lows, and combined with higher interest rates driving higher minimum payments, consumers are obviously feeling the stress. At the same time, delinquency rates on these higher balances have increased over 45%, putting significant strain on bank credit losses. So what can lenders do? Let’s start by looking at what consumers want, and what outbound calling agents would like to see as well. What do Customers Want? And What do Agents Want? For businesses executing outbound call strategies and leveraging dialer technologies, the range of right party contact rates are anywhere from a struggling 0.5% to 4%. With these diminished returns of connection rates, calls become more expensive and less impactful. It’s no secret that consumer preferences are changing rapidly and younger generations especially do not want to answer phone calls—and it’s important to keep in mind these younger borrowers will be the customers businesses will be servicing for the next 30 to 40 years, especially in a delinquent environment. In general, consumers want to pay off their debts, but they want to be able to do so when it's most convenient for them, which is often outside the “presumptively convenient times” between 8am and 9pm. In fact, 25% of payments come in after 9pm or before 8am. At TrueAccord, results show that more than 96% of customers resolve debts without any human interaction when digital options are offered. But what does that mean for the humans dialing phones for traditional call-and-collect methods? When businesses deploy an outbound call strategy before digital, often agents are shooting in the dark despite good intentions and dedicated efforts—which can affect outbound agent morale, making it a difficult environment to hire and retain top talent. And given today’s economic landscape, it's challenging to call and collect from people who are behind on their bills or payments when so many other financial obligations are competing for dollars. The key: let agents do what agents are good at—the human touch—but leverage digital as the first touchpoint. Let digital get the customer to understand where they are in delinquency. If and when they want to talk to a human, agents are there to do what agents do best: empathize and resolve any issues that digital cannot. Agents are able to attend to higher-value inbound calls when digital, self-serve options are available for those who just want to make a payment—and it allows those customers to do so in a more convenient, preferred way. Digital-First, Save More Digital early stage solutions reduce collections costs for leading organizations across industries by making full-time employees (FTEs) more impactful (or even lowering FTE headcount) and reducing overall expenses while maximizing repayment rates.  Companies that do rely heavily on an outbound call strategy must realize how expensive each call becomes. The longer that an account is in delinquency, every call becomes more expensive because the likelihood or the propensity to pay diminishes as the debts get older in age. So being able to automate and find those right channels at the right time with a digital strategy will help those phone calls get better results. Plus, the digital first strategy is infinitely scalable—it doesn't matter how rapidly a business grows on the frontend for lending or on the backend with new accounts that fall into delinquency. This digital-first approach allows companies to mitigate against turnover or having to compete for talent in the market. And again, FTEs can now be more effective in the delinquency cycles where phone calls are preferable, especially as accounts get further into delinquency. Making outbound phone calls absolutely serves a vital part of a business’s omnichannel strategy, but deploying digital first will make those calls more cost-effective. It also delivers a stronger connection rate by identifying those preferences through feedback from leveraging a digital-first communication strategy. Think about how this data can help businesses not only from a performance and liquidation perspective, but by learning from which customers are opening communications versus which ones aren't. Those that don't respond to digital should go to the top of the call queue because the data points towards a probable preference for person-to-person calling. TrueAccord Difference Learning from these digital engagements is vital for optimization, but if an organization is new to digital communications or has only been sending mass-blast, one-size-fits-all emails, it can feel like an uphill trek to start getting insights to drive better results.  But by partnering with TrueAccord, who's been mining consumer engagement data for over 10 years, businesses get plugged in and start benefiting from our data from the get-go. Being able to automate with TrueAccord allows your company to focus on inbound human interactions while simultaneously, TrueAccord’s first-party, client-labeled platform sends effective digital communications to all of your past-due accounts.  The bottom line benefits of working with TrueAccord: Maximize the productivity of your business’s resources with a managed, digital-first approach that enhances the efforts of your FTEs and overall collections operations. Start with a consultation today!

Disclaimer: The information provided in this blog post does not, and is not intended to, constitute legal advice.  Protecting consumer privacy is not an unfamiliar concept in our industry and it’s something that should already be woven into our policies, procedures, and practices. With the rapid increase of state privacy laws across the United States, any company that collects, uses, transmits, or receives consumer data has to stay up-to-date on all related compliance issues. In a previous webinar, Coast to Coast—the State of Privacy and Compliance in 2023, TrueAccord’s legal experts discussed the newest federal privacy laws and all the related compliance issues. Watch the full webinar on-demand now! The passage of the FTC’s Safeguards Rule, amending the Gramm Leach Bliley Act (GLBA), has been a big topic in data security conversations across the financial services industry as businesses prepare to be in compliance on or before the extended effective date of June 9, 2023. Meanwhile, several states have actively been considering and passing new legislation requiring additional policies, controls, and practices not only in the data security space but also for data privacy and data breaches. It is important for Chief Information Security Officers, Privacy Officers, and Chief Compliance Officers to stay on top of this legislation, as well as Chief Executive Officers since we have seen many federal and state actions naming the CEO in their individual capacity for failing to properly secure and protect data or to properly delegate these responsibilities to the appropriate persons within their organizations.  **Please note this article is not legal advice. This is not an exhaustive list of all laws. You should consult a lawyer if you have questions about federal and state data security, privacy or breach laws. Data Breach Laws All 50 states have data breach notification laws on the books. In 2022, 19 states considered enhancing their data breach laws. Those states that passed revised data breach laws, tightened up notification timelines, added additional definitions of what constitutes personal information, and expanded the notification requirements to include additional state agencies. For example, Arizona’s law HB 2146, amending Arizona Revised Statutes section 18-552, not only requires that notification be made to consumers but also to the Director of Arizona’s Department of Homeland Security. If the breach impacts more than one thousand people, then the law requires the notification also be given to the three largest nationwide credit reporting agencies, the attorney general, and now the Director of Arizona’s Department of Homeland Security.  While most states are shortening the time frame in which a consumer must be notified of a data breach to 45 days or less, some of these laws include exceptions or a short list of situations in which a delay in notification is permissible. For example, Indiana’s revised law, H.B. 1351, amending Indiana Code 24-4.9-3-3, limits a permissible delay in notification three circumstances: (1) when the integrity of the computer system must be restored, (2) when the scope of the breach must be discovered, or (3) when the attorney general or a law enforcement agency asked to delay disclosure because disclosure will impede a criminal or civil investigation, or jeopardize national security. Both Maryland (H.B. 962, amending Maryland Personal Information Protection Act and section 14-3501 of the Annotated Code of Maryland)and Pennsylvania (S.B. 696, amending the Pennsylvania Breach of Personal Information Notification Act) expanded the definition of “personal information” to include medical and health information, including a definition of “genetic information” in Maryland’s law. Since the webinar, Utah Governor Spencer Cox signed into law Senate Bill 127 on March 23, 2023, which amends the state’s data breach notification statutes. The amendments go into effect May 2, 2023.* Along with updates to states’ laws, Federal regulators are also providing additional guidance too. For example, the Office of the Comptroller of the Currency (OCC) recently released more information regarding when banks need to know from their vendors about data breach including ransomware notifications. Data Privacy Laws In addition to creating and updating laws to help consumers in the event of a data breach, states have also been enacting laws dedicated to protecting consumer privacy. There are six states with comprehensive data privacy laws: California, Connecticut, Colorado, Iowa*, Virginia, and Utah. These laws give consumers various rights over their personal information, such as the right to know what information companies collect and use, a right to correct their information, a right to opt-out of the sale of such information, and a right to request deletion.  In 2022, Congress introduced a federal privacy law, HR 8152, the American Data Privacy and Protection Act; however, it did not make it to the finish line despite having bipartisan support. It contained some preemption of state privacy and data protection laws, which would have been a relief to many companies navigating the existing patchwork of state laws.  As of January 2023, many states have introduced privacy-related bills and this is likely to continue throughout the years to come.  California took the privacy law lead in passing the California’s Consumer Privacy Act of 2018 (CCPA) that went into effect in January of 2020 to protect the use and sharing of personal data. California recently expanded the CCPA with the California Privacy Rights Enforcement Act (CPRA) that took effect on January 1, 2023. The law created the new California Privacy Protection Agency and gave it the power, authority, and jurisdiction to implement and enforce CRPA. Additionally, businesses must regularly submit their risk assessment on the processing of personal information to this new agency.  The four other states that followed suit have substantially similar laws with broad definitions of personal information. These laws typically apply to persons that conduct business in the state and processing a set minimum of consumer data records (typically 25,000 or more) or businesses who earn at least 50% of their revenue from the sale of consumer data.  These laws give consumers various rights, such as the right to access their personal data, correct inaccurate personal data, delete personal data, in certain circumstances, obtain a copy of the personal data they previously provided to a controller, opt-out of the processing of their personal data if related to targeted advertising, sale of personal data or certain profiling activities, appeal a controller’s refusal to take action on a request, and submit a complaint to the attorney general if an appeal is denied. Interestingly, Colorado’s law makes clear that a consumer's consent is not valid if obtained through the use of a “dark pattern.”  These laws do not give consumers a private right of action but are enforced by the state’s attorney general with civil monetary fines calculated per violation. These laws also contain exemptions for data already protected by other laws, such as HIPAA, FCRA, and GLBA. Virginia’s law took effect January 1, 2023. Both the Connecticut and Colorado Data Privacy Acts will go into effect July 1, 2023. The Utah Consumer Privacy Act takes effect December 31, 2023. The Iowa privacy bill (SF 262) was signed into law by Gov. Kim Reynolds on Tuesday, March 28, 2023. The legislation is set to take effect Jan. 1, 2025.* Best Practices for the Future of Data Security & Privacy  Having good security practices in place is not only beneficial for both consumers and businesses, but is absolutely critical to stay compliant with all the new laws and amendments being introduced.  So what are some of the best privacy and security practices to implement to protect customers, companies, and stay compliant?  Practice data minimization. Know where personal information lives at all times by creating a data map of where the data goes and is stored throughout your systems, which includes knowing your vendor’s data security and privacy practices and controls.  Know who has access to personal information and routinely examine if that access is necessary to complete that job function. Be intentional with how data is organized and stored so it can be easily segmented and treated differently if need be (think network segmentation).  Have a public facing Privacy Notice–and make sure it accurately reflects your practices for use, collection, deletion and correction. Conduct an annual data security and privacy risk assessment to continually reassess areas for improvement and where you may need additional controls. Ensure contracts with parties whom you receive and/or give personal information to specifically address each parties’ obligations and restrictions for how personal information is used, shared, disclosed, stored, and sold (if permitted). Compliance with data privacy and data security requirements will continue to progress as new laws and regulations are passed. Best practices will continue to evolve as well, as we continue to learn more about the expectations from Federal and state legislators and regulators, and as companies navigate evolving threats and vulnerabilities. Watch the full Webinar: Coast to Coast— the State of Privacy and Compliance in 2023 here »» Learn more in our Compliance & Collections Resource Center or schedule a consultation today!  Footnotes:  *The Iowa privacy bill (SF 262) was signed into law by Gov. Kim Reynolds on March 28, 2023 after TrueAccord’s Coast to Coast webinar.  *The data breach law for Utah was passed on March 23, 2023 after TrueAccord’s Coast to Coast webinar

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!