Tag: consumer experience

Q1 Industry Insights: Started Strong, But “Considerable Turbulence” Leaves Consumers on Edge

By on April 28th, 2025 in Industry Insights

What do canceled hair appointments and increased lipstick and beer sales have in common? These untraditional indicators, among other discretionary expenditure trends, often show consumer sentiments around finances well before a recession hits. Coming out of 2024, the average U.S. household owed $11,303 on credit cards, and while credit card charge-off rates and delinquencies both declined slightly, experts are not declaring a definitive turnaround given the ongoing economic uncertainties and high balances. Consumers today are confronted with new developments regularly, leading to “considerable turbulence” in the words of JPMorgan Chase CEO Jamie Dimon, and without much guidance on what the implications are for their personal financial outlook, which understandably affects their spending and budget considerations.

The main challenge in engaging with consumers in debt in today’s economic climate is how to offer them an affordable way forward. Other challenges for businesses’ debt collection operations come in the forms of regulatory changes impacting innovation and uncertainty about staying in compliance. 

As you try to keep up with your bottom line in a rapidly evolving consumer financial landscape, let’s look at what you should consider as it relates to debt collection moving forward in 2025.

What’s Impacting Consumers?

It’s important to note that this report is from data covering a period of time before the majority of new tariffs went into effect, and everyone from Wall Street to consumers are waiting to see what happens next. Against a backdrop of an erratic market and general unease about the future of the U.S. economy, inflation reports offered a bright spot showing cooling in March to close out Q1. The consumer price index (CPI), excluding volatile food and energy costs, increased 0.1% from February, climbing 2.4% from a year earlier—the least in nine months and lower than expected. The overall CPI declined 0.1% from a month earlier, the first decrease in nearly five years, reflecting a decline in energy costs, used vehicles, hotel visits, car insurance and airfares.

The overall jobs numbers from March signaled a solid labor market, with employers adding 228,000 jobs and the unemployment rate changing little to 4.2%. Job gains showed up

in health care, social assistance, transportation and warehousing, along with retail trade, which reflected the return of workers from a strike, while federal government employment declined as a result of wide-reaching layoffs.

The Federal Reserve (Fed) held rates steady at 4.25-4.50% in March. In its statement following the March meeting, the Fed stated that “uncertainty around the economic outlook has increased.” As a result, the Fed lowered economic growth expectations to 1.7% gross domestic product (GDP) growth in 2025, down from a 2.1% estimate, while upping the projected core PCE inflation rate to 2.8% from 2.5%. The next meeting is on May 6 and while many still expect two rate cuts this year, the outcome will reflect the bank’s outlook given the new landscape of tariffs and their anticipated impact on inflation.

In February, the Fed released its Quarterly Report on Household Debt and Credit for Q4 2024, which showed total household debt increased by $93 billion in Q4, to $18.04 trillion. The report also showed that people are having more trouble paying off that debt, with credit card balances increasing by $45 billion to $1.21 trillion and auto loan balances increased by $11 billion to $1.66 trillion. Delinquency rates ticked up 0.1% from the previous quarter, with 3.6% of outstanding debt now in some stage of delinquency. Transition into serious delinquency, or 90+ days past due (DPD), also increased for auto loans, credit cards and HELOC balances. 

Experian’s Ascend Market Insights from February 2025 data showed that overall delinquent balances (30+ DPD) increased by 16.67%, driven by a 537.4% increase in delinquent student loan balances, a 16.28% increase for first mortgages and a 4% increase for bankcard balances. The huge surge in delinquent student loans is due to an increase in the volume of 90 DPD data furnishers have started to report after the pause on student loan payments ended.

By the end of February, nearly 8 million people with student loans had missed resumed payments and were met with plunging credit scores. As it stands, 1 in 5 people who are supposed to be making payments on their federal student loans are more than 90 DPD, nearly double the percentage of delinquent borrowers since the pandemic hit and the government paused payments, with reasons for delinquency ranging from inability to pay and difficulties working with servicers to missed communications that never reached the recipient.

The CFPB, Regulations and Compliance are Evolving

While the Consumer Financial Protection Bureau’s (CFPB) normal activity has been disrupted due to changes in direction from the administration, it did release a report looking at national rental payment data from September 2021 to November 2024 showing that the percentage of renters who paid late fees in the last year reached 23% in February 2023. While the rate had declined to slightly less than 14% in November 2024, the CFPB’s analysis found that the median outstanding rental balance rose 60% between September 2021 and November 2024, suggesting increased financial distress among affected households.

Meanwhile, the Federal Communications Commission (FCC) is seeking public input on identifying FCC rules for the purpose of alleviating unnecessary regulatory burdens. In a public notice released March 12, 2025, the FCC announced the Commission is seeking comments on deregulatory initiatives to identify and eliminate those that are unnecessary in light of current circumstances. The FCC notice stated: “in addition to imposing unnecessary burdens, unnecessary rules may stand in the way of deployment, expansion, competition, and technological innovation.”

In the meantime, two FCC Orders about the Telephone Consumer Protection Act (TCPA), which applies only to calls and texts made by an automated telephone dialing system (ATDS) and prerecorded or automated voice calls (aka robocalls or robotexts) come into effect. First, a 2024 Order released last February impacting revocation of consent to receive autodialed calls and texts and prerecorded or artificial voice calls. The 2024 Order conflicts with the CFPB’s Regulation F Debt Collection Rule about the scope of an opt-out. Second, is a 2025 Order released this past February aiming to strengthen call blocking of illegal calls, which may result in the blocking of lawful debt collection calls and texts.

Debt collectors and other companies impacted by these two orders may want to submit comments to the FCC identifying the particularly burdensome aspects that could be revisited and slightly revised to be consistent with consumer preference, consistent with other laws and regulations (like Regulation F), and less burdensome on companies.

Eyes will continue to be on the developments with the ever-evolving regulatory landscape and what happens with the CFPB, which will impact how businesses both comply with regulations and innovate through technology in consumer financial services.

Consumer Sentiment

The Fed’s March Survey of Consumer Expectations showed that inflation expectations increased by 0.5% to 3.6% at the one-year-ahead horizon while consumers’ expectations about their households’ financial situations deteriorated with the share of households expecting a worse financial situation one year from now rising to 30%, the highest level since October 2023. The report also showed Unemployment, job loss, earnings growth and household income growth expectations also deteriorated.

The latest University of Michigan consumer sentiment survey showed that sentiment fell to 50.8, down from 57.0 in March. The drop, a 10.9% monthly change and 34.2% lower than a year ago, was the lowest reading since June 2022 and the second lowest in the survey’s history since 1952. Respondents’ expectation for inflation a year from now jumped to 6.7%, the highest level since 1981. The current economic conditions index and expectations measure dropped by 11.4% and 10.3% from March respectively.

Similarly, the Conference Board’s Consumer Confidence Index in March fell by 7.2 points to 92.9. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, also decreased 3.6 points to 134.5 while the Expectations Index based on consumers’ short-term outlook for income, business and labor market conditions fell 9.6 points to 65.2, the lowest level in 12 years and well below the threshold of 80 that usually signals a recession ahead.

What Does This Mean for Debt Collection?

All of the economic indicators and pessimistic consumer outlook, especially given stock market turbulence that impacts many Americans’ retirement savings, makes it likely that consumers across all income brackets will pull back on discretionary spending. And for those already financially stressed, the added burden of increased inflation due to tariffs could make it harder for budgets to meet debt obligations. For lenders and collectors, here are some recommendations for your debt collection strategy in 2025:

  1. Ensure Your Messages Are Getting Through. If you’re calling someone who prefers to receive information by email, they likely won’t answer and get your message. Similarly, if you’re using digital channels and your email gets caught in a spam folder, your message won’t make it to the intended recipient. Best practices for email delivery and deliverability are just as important as using the right channel. Ensure your collection partners who claim to engage consumers via email can back it up with the metrics to prove that their messages actually make it through.
  1. Do More With Less. Technology exists today that can create efficiencies across many aspects of debt collection operations, which means increasing account volume doesn’t have to equal higher costs. Look for ways you and your collection partners can leverage new tech to streamline operations and you can reap the benefits of improved operational efficiency, compliance efforts and consumer experience.
  1. Get Your Lawyer on Speed Dial. Or ensure your debt collection partner is keeping tabs on the rapidly evolving regulatory and compliance landscape to inform their practices. There’s a lot going on, quickly, and if you miss something the repercussions of noncompliance could cost you financially or reputationally.

SOURCES:

Using SMS in Omnichannel Debt Collection—Digital Strategy Beyond Email

By on January 27th, 2025 in Customer Experience, Product and Technology, User Experience

For consumer engagement in debt collection, many organizations and agencies have moved away from outbound calling—but don’t discount reaching out to consumers’ phones just yet! Text messaging (referred to as SMS or short message service) is becoming a favored method for consumers to receive business communications.

It’s common knowledge these days that people tend to ignore phone calls from unknown numbers and often throw away physical letters without opening them, but they will also delete unfamiliar emails without reading them, too.

So if your digital communication strategy only includes email, consider this: consumers are nearly twice as likely (1.8x) to prefer texting to any other communication method. Gartner reports SMS open and response rates as high as 98% and 45%, respectively, compared to corresponding figures of 20% and 6% for email.

For successful debt collection operations, adding SMS into the digital mix to build an omnichannel approach (along with email, calling, letters, and self-serve options) boosts engagement and liquidation rates.

Why is SMS Critical in Collection Communications?

SMS allows creditors, debt collectors, and financial institutions to communicate with individuals in a brief and direct manner, more so than traditional methods such as letters or phone calls—or even email. SMS is a powerful tool for debt collectors looking to engage with consumers who might otherwise avoid other forms of communication. These messages can serve a variety of purposes, from notifying debtors of outstanding payments to reminding them of upcoming due dates or offering payment plan arrangements.

SMS offers several practical advantages for both debt collectors and consumers. The concise nature of SMS—limited to 160 characters—forces communication to be direct and to the point, ensuring that messages are clear and easy to understand. Consumers who may feel overwhelmed by lengthy phone conversations or complex emails often appreciate this streamlined approach.

Surveys have found that 85% of consumers state that they prefer to receive an SMS instead of an email or phone call and more than 55% said they prefer text messaging because it’s immediate, convenient, and allows them to quickly get updates—and that’s just the beginning of consumer preference statistics surrounding SMS communication:

  • 65% want their accounts, billing, and payment reminders sent to them as a text
  • 89% say they prefer texting with businesses over any other mode of communication
  • 97% of companies that have launched texting initiatives say those initiatives help them communicate with consumers more efficiently

And studies of overall communications from businesses show that consumers are 134% more likely to respond to a text than an email.

Use Cases and TrueAccord Success Stories

According to the Pew Research Center, 97% of Americans own a cell phone, and nearly the same percentage sends at least one text message each day, making SMS an already well-established communication method most consumers are familiar and comfortable with. By using SMS to reach out to delinquent consumers, debt collectors tap into a channel that’s not only widely accessible but also highly effective in terms of response and engagement. With its speed, convenience, and familiarity, expanding digital strategies to include SMS is critical for consumer preference.

Along with this preference and the corresponding better engagement rates, compliance is one strong case for using SMS in consumer engagement for collections. The implementation of Regulation F by the Consumer Financial Protection Bureau (CFPB) has helped modernize the Fair Debt Collection Practices Act (FDCPA) by focusing on electronic communications and giving guidance on how to properly use SMS as a channel.

SMS provides consumers with links directly to account portals where consumers can get more information, pay, dispute, etc. at a time that is convenient for them and without having to talk to an agent.

“This is my first time paying off a debt collection online by just receiving a text. I just received a text from the debt collector and I made a payment arrangement just by a few clicks. This way is just so much better and easier.” – Real feedback from consumer working with TrueAccord

Positive consumer feedback is just one part of the TrueAccord difference for this channel. TrueAccord goes beyond just adding SMS into the mix—our team digs deeper to ensure the best possible engagement in this channel. Similar to email deliverability, TrueAccord teams track SMS reachability, or the likelihood that a text message sent by a business actually reaches the intended recipient’s mobile device.

And just like with every approach in our omnichannel strategy, our machine learning decision engine, HeartBeat, guides optimal communication with the right message, right time, and right channel. From reminders to direct calls-to-action, SMS offers many benefits for both consumers and businesses thanks to the speed, convenience, and higher engagement rates towards debt resolution.

Want to know more about how the omnichannel approach and how each channel influences the effectiveness of a business’s overall collection strategy? Download our new eBook, Omnichannel Communication in Debt Collection: An In-Depth Look at Advanced Engagement Strategy by Channel now»»

Q2 Industry Insights: Beating the Economic Heat and Keeping Up with Compliance

By on July 9th, 2024 in Industry Insights

The dog days of summer are ahead, and with inflation and high interest rates still sticking around, consumers in the U.S. will be feeling the heat financially. Consumer sentiment and data-based indicators tell some of the story, but what better way to gauge the consumer financial landscape than by looking at how people spend their free time and money? 

While consumers embraced the ‘YOLO economy’ coming out of pandemic times – spending wildly on products and experiences – today’s high inflation, low savings and a cooling job market have shifted priorities for many, leading to weakened consumer spending. And businesses are responding accordingly to the lower demand – several top musical acts from Jennifer Lopez to the Black Keys have canceled summer tours due to low ticket sales while retailers like Walmart and Target are lowering prices on certain goods to appeal to budget-strained shoppers. 

Despite families looking for ways to save this summer, their vacation plans must go on. The Transportation Security Authority has been anticipating and reporting record air travel numbers while a recent LendingTree survey found that 45% of parents go into debt to pay for a Disney vacation and few have regrets about it, indicating people will still prioritize spending for some experiences.

Meanwhile, the Consumer Financial Protection Bureau (CFPB) has been busy, with new rules impacting lenders and collectors across the spectrum. What does this all mean and what’s the outlook for the second half of the year? 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 2024.

What’s Impacting Consumers?

Inflation finally started slowing in May and then showed a decline in June, landing at 3% from a year ago and the lowest level in more than three years. Both headline and core inflation beat forecasts but housing costs continued to rise and remain a key contributor to inflation. Being heavily weighted in the Consumer Price Index (CPI) formula, it’s unlikely to see big drops in CPI until these costs start to fall. In June, Federal Reserve officials held the key rate steady and penciled in a single rate cut this year while forecasting four in 2025, reinforcing calls to keep borrowing costs higher for longer. Meanwhile, the labor market has moved close to its pre-pandemic state and the overall economy continues to grow at a solid pace.

But even the 2% drop in the energy index won’t be enough to combat the inflated cost of keeping cool this summer, with predicted extreme heat set to drive home cooling costs up to a 10-year high. The average cost of keeping a home cool from June through September is set to reach $719, nearly 8% higher than last year and a big jump from the 2021 average of $573. Concerningly for lower-income households, organizations distributing federal financial support expect they’ll be able to help roughly one million fewer families pay their energy bills this year, in part due to government funding for the Low Income Home Energy Assistance Program (LIHEAP) falling by $2 billion from last fiscal year.

Coming out of Q1, total household debt rose by $184 billion to reach $17.69 trillion, according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit. Mortgage and auto loan balances continued climbing, increasing to $12.44 trillion and $1.62 trillion respectively. Overall, delinquency indicators decreased positively as we moved through Q2 as seasonally expected, partly due to tax season. In May, overall delinquent balances (30+ DPD) increased by 3.46%, driven by a 6.06% increase in delinquent mortgage balances. But mortgage was an exception, not the norm: there was a 0.55% decrease MoM in 30+ DPD delinquent accounts overall. 

Credit card balances also declined seasonally as expected in Q1 to $1.12 trillion, but new delinquencies rose with nearly 9% of credit card balances and 8% of auto loans transitioning into delinquency. Despite this latest decrease, credit card balances are still up $259 billion since the fourth quarter of 2021. Thanks to record interest rates, stubborn inflation and other economic factors, credit card balances are likely only going to climb, despite what we saw in the first half of the year.

The verdict is still out on how those with student loans are faring with resumed payments. Missed federal student loan payments will not be reported to credit bureaus until the fourth quarter of 2024. Because of these policies, less than 1% of aggregate student debt was reported 90+ days delinquent or in default in the first half of the year and will remain low through the end of the year.

Busy Season at the CFPB

With a flurry of announcements in the past few months, the CFPB has been busy. The biggest win: a long-awaited United States Supreme Court decision came out in May ruling that the CFPB’s funding is constitutional, leaving the Bureau free to uphold its mission of protecting consumers and ensuring that all Americans are treated fairly by banks, lenders and other financial institutions.

On the consumer fairness front, and after releasing research showing that 15 million Americans still have medical bills on their credit reports despite changes by Equifax, Experian and TransUnion, the CFPB proposed a rule to ban medical bills from credit reports, a move that would remove as much as $49 billion of medical debts that unjustly lower consumer credit scores. In another attempt to help consumers by bringing homeownership back into reach amidst high interest rates and home prices, the CFPB also started an inquiry into mortgage junk fees and excessive closing costs that can drain down payments and push up monthly mortgage costs.

As related to business operations oversight, in June the CFPB issued a new circular on “unlawful and unenforceable contract terms and conditions in contracts for consumer financial products or services.” This warning makes it clear that it is a UDAAP (Unfair, Deceptive, or Abusive Acts or Practice) to have an unlawful, unenforceable term in contracts with consumers.

Later in June, the CFPB also finalized a new rule to establish a registry to detect and deter corporate offenders that have broken consumer laws and are subject to federal, state or local government or court orders. This registry will help the CFPB to identify repeat offenders and recidivism trends to hold businesses accountable as historically, nonbank entities faced inconsistent oversight, making it challenging for regulators to identify and address potential risks to consumers.

As the CFPB works to accelerate the shift to open banking in the United States, it also announced a new rule establishing a process for recognizing data sharing standards and preventing dominant incumbents from inhibiting startups.

At the end of June, the Supreme Court overturned the Chevron doctrine, a precedent that has allowed federal agencies like the CFPB significant authority to interpret ambiguous laws. This means that judges will use their own judgment to interpret laws rather than deferring to agency interpretations, making it easier to challenge and overturn agency regulations. As a result, the industry’s regulatory framework will become more unpredictable as courts take a larger role in interpreting laws and will require businesses to monitor and adapt their compliance and legal strategies.

A Roller Coaster of Consumer Sentiment

The first half of 2024 has been an economic roller coaster for consumer spending, resulting in whiplash for consumer sentiment. While the soft landing may still be on track, that track doesn’t appear to be as straightforward as hoped. There is an onslaught of mixed messages from, “consumers are proving to be more resilient than expected as they continue to spend, staving off what had been predicted to be an inevitable recession” to “consumers are actually financially stretched from depleting their pandemic-era savings and battling ongoing inflation and higher interest rates”.

The latest Paycheck-to-Paycheck report from PYMNTS Intelligence found that as of March, 58% of all U.S. consumers live paycheck to paycheck, regardless of their income levels. Causes for this financial situation vary and range from insufficient income and family dependents to large debt balances and splurging unnecessarily. While financial goals also vary across consumer segments, paying down debt is one common goal across all generations: 15% of Gen Z, 20% of millennials, 23% of Gen X and 22% of baby boomers and seniors said repaying debt is a priority.

Recent consumer surveys have found that 22% of respondents expressed feeling less discomfort about spending a lot of money when using a credit card, and more than half reported they are more likely to make impulse purchases when using cards. Whatever the sentiment, people are feeling some confidence to continue to spend and continue to carry a debt balance, with 41% of consumers reporting a revolving month-to-month balance on their credit cards.

What Does This Mean for Debt Collection?

Between these highs and lows of economic indicators and consumer sentiment, a serious fact remains for businesses: delinquency will continue to be an issue through 2024. For companies looking to recover those delinquent funds, understanding how to communicate with consumers where they are in this roller coaster can mean the difference between repayment and write-off. For lenders and collectors, here are some things to consider:

  1. Shift the collection mindset. Pivoting debt resolution operations from only being focused on roll rates and placements to a more consumer-centric engagement strategy is the first critical step to productively engaging consumers.
  1. Customization is key. Effective debt recovery communications will resonate with consumers and match where individuals are with the right message to engage with empathy and options for repayment; the right channel to engage through their preferred method of communication; and the right time to engage on their own terms when they are ready.
  1. Don’t skimp on compliance. Not only does following the rules of debt collection keep you out of hot water, adhering to the consumer-friendly rules will set up the best possible experience for consumers, leading to better engagement and repayment rates. Here’s a comprehensive look at what you need to know about collections compliance to get started.

SOURCES:

Developing with Empathy: TrueAccord’s Mission-Driven Approach

By on December 21st, 2022 in Customer Experience, Industry Insights, Machine Learning, Product and Technology, User Experience
Developing with Empathy

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!

Flipping the Script: Collecting with Kindness

By on April 21st, 2022 in Customer Experience, Industry Insights

Historically, debt collectors have been depicted as hostile, intimidating or downright rude – and over the years they’ve confirmed those stereotypes through aggressive phone calling and deceptive tactics. But to what success and at what cost? We know there’s a better way. The idea of compassionate, considerate consumer communication is behind TrueAccord’s approach to debt recovery and drives our innovation, and based on what we’ve seen, we believe there’s a lesson to be learned for others in the debt collection space. 

In collaboration with OnePoll, TrueAccord recently surveyed consumers about their financial regrets and found that 63% of respondents had some amount of money in collections. While 88% of respondents didn’t have any past experience with accounts in debt collection to report, the 12% that did weren’t so lucky, and their experiences were pretty awful. We don’t like to hear about consumers being treated badly and reading these consumer comments brings to light the problem we’re trying to solve. 

So what are consumers’ complaints about their experiences with debt collectors? Here are just a few:

  • “A million phone calls a day.”
  • “I was disgraced in a public place.”
  • “Relentless and rude, judgemental and uncaring.”
  • “Terrible experience, they were perfectly nasty.”
  • “They are mean and evil and clever and make you feel terrible about yourself.”
  • “They get angry when I don’t have the money to pay back in time.”

We’re here to flip the script. At TrueAccord, we don’t call consumers to collect past due debts, and we certainly don’t threaten or harass. By using a digital-first communication approach and friendly, humane messages, we actually connect with consumers and they feel empowered and motivated to pay. 

Don’t believe us? Here’s some real-life customer feedback from people TrueAccord has helped out of debt:

  • “Thank you for your patience and understanding!”
  • “Love the email communication and the ability to pay online.”
  • “I actually looked forward to making payments because I felt there was a sense of mutual respect between myself and TrueAccord. It felt good to take care of a lingering debt.”
  • “Thank you for your kindness, patience and professionalism in the wake of hardship.”
  • “It is amazing to be able to feel good about paying your bills. You helped me all the way. No pressure.”
  • “My experience with TrueAccord was seamless. Truth be told, it’s the first time I’ve ever enjoyed time spent with a debt collection company!”

So far the kindness approach has worked for TrueAccord – with more than 16 million customers served, we pride ourselves on our 4.7 on Google reviews, A+ rating with the BBB, and overwhelmingly positive customer feedback, not to mention our industry-leading recovery results. We’re proving that when you treat consumers with respect and kindness you can actually achieve better results for your business and customers.

Interested in finding out more about how outbound calling for debt collection is a thing of the past, our approach to digital-first debt collection and how it can work for your business? Check out “Outbound Calling Doesn’t Work, Here’s What Does” for more.

Building a World-Class Recovery & Collection Strategy: The Complete Starter Kit

By on March 7th, 2022 in Company News, Industry Insights
TrueAccord Blog

Delinquencies are a predictable reality for any business that handles payments, but the most efficient and effective way to recover delinquent funds isn’t always as predictable.

A recovery team could theoretically chase down every last delinquent dollar. But it would soon reach the point at which the operational cost of the effort – and the associated legal and reputational risk – would cut into profitability.

With so many factors involved, it can be difficult to even know where to start…

The planning process should start with an in-depth understanding of what makes a world-class recovery strategy in today’s digital-first age, a look at the big picture for your specific industry all the way down to your detailed metrics, and KPIs that should be steering your strategy. Consumers expect a seamless, personalized experience in every financial transaction, and your recovery operations can continue to deliver that all the way through the customer journey when you have the right strategy in place.

There is no one-size-fits-all when it comes to debt recovery and collection, but getting started doesn’t have to be daunting when you have the right resources to get you going.  

Beyond Best Practices and into Actionable Tactics 

Go beyond general best practices and start plugging in your own data with the tools inside our new Recovery & Collection Starter Kit. We have assembled guides, calculators, cheat sheets, and more to provide the frameworks and metrics for your organization to get started architecting the right recovery strategy for the long run. 

Each starter kit includes:

  • World-Class Recovery Guide — pick your industry edition!
    • Manage delinquencies without sacrificing consumer experience
    • Balance performance with operation metrics and consumer-focused KPIs
    • Compare, contrast, and evaluate in-house vs partner collection strategies
  • Cheat Sheet: Top KPIs for Your Recovery Operations 
    • Differences between traditional debt collection metrics, digital engagement tracking, operational KPIs, and more
    • New consumer-centric KPIs for today’s most effective recovery strategy 
    • How to calculate profitability of a collection operation using operational metrics
  • Interactive Recovery & Collection Calculator
    • Enter your business’s KPIs to measure the profitability of your recovery
    • Discover opportunities to improve the reach, resolution funnel, and cost effectiveness of your recovery operation
    • Scenario plan how much in additional revenue and cost savings the shift to an intelligent, digital strategy can drive for your business
  • Choosing a Recovery Partner: Top 6 Questions to Ask
    • Detailed questions on communication, technology, risks, and more
    • Why each question matters for both profitability and consumer-experience 
    • Based on each question, what to look for in a potential partner’s responses 

Download your Recovery & Collection Starter Kit now>>

These tools will teach you how to maximize profitability by efficiently recovering money lent to customers or members—while simultaneously maintaining consumer loyalty. Now is the time for businesses across verticals to embrace a disruptive, obsessively consumer-centric mindset for recovery and collection, and experience the results of this new approach. 

Survey: Consumers Talk Financial Regrets, Credit Scores and Debt

By on February 23rd, 2022 in Industry Insights

Most Americans are in enough credit card debt, they would do anything to go back in time and change the outcome of their financial situation, according to new research.

A survey of 2,000 general population Americans examined how they tackle their financial hurdles and found the average person owes $3,083 to credit card debt. 

Many respondents shared their financial regrets over the years, from not setting up a retirement plan when they were younger (51%), to not paying close attention to their credit score (43%) and buying goods that were too cheap (41%).

Three-quarters (76%) have made an average of five financial decisions they regret in the past five years. And those who are eager to get out of debt (76%) have already planned their “debt free” celebrations once they finished paying all their dues. 

Conducted by OnePoll and commissioned by TrueAccord, a digital debt collection company, the study revealed 77% of respondents have lost an average of nine hours of sleep per week due to their financial woes.

When they’re in a financial crisis, 63% of people will turn to someone they trust — with half turning to their parents, 48% to their best friend and 46% to their primary bank. 

Overall, 87% of people credit their financial “wins” to the people who had given them advice, while seven in 10 (71%) said they’ve learned from others’ financial mistakes.

“There are close to 80 million Americans with past due debt and most want to pay it off and move on with their lives. But that is exceedingly difficult, especially in a debt collection system that treats consumers poorly and is more interested in process than simplifying debt repayment,” said Ohad Samet, founder of TrueAccord. “What we see more and more are consumers in debt who want to pay off their balances but are met with challenges of communicating with collectors, financial literacy and budget considerations that create roadblocks to being debt-free.”

For many Americans, recovering from financial regrets starts with their credit score. The average person doesn’t understand the importance of their credit score until they’re 28 years old, but believe it’s better to start building a credit at 25 years old.

Over four in five (84%) said maintaining a good credit score is important to them, with nearly as many (81%) saying it’s even more important than their social lives.

Respondents also recalled the feelings they have when they see their credit card statements and when they’re about to make a payment. When seeing their statements, 31% said they feel confident and 24% feel fear. 

On the other hand, people feel satisfaction (36%) and happiness (22%) when making a payment.

While 38% don’t plan on taking out any kind of loans in 2022, many are already making plans for loans in the year ahead — including credit card loans (34%), personal loans (33%) and mortgages (30%). 

“For those who are able to repay their balances, there may still be a longer-lasting impact to their credit score that can be difficult to remedy and further inhibit financial stability,” added Samet. “People will continue to borrow money when they need it, but what’s important is that they are informed on loan or credit terms and have a financial plan in place to ensure they’re making smart spending and repayment decisions. At the end of the day, though, getting into collections is often the result of trauma — loss of work, a healthcare crisis, and so on — many of them unexpected.”

TOP 10 FINANCIAL REGRETS AMERICANS HAVE

  1. Not starting a retirement plan while I’m young 51%
  2. Not paying attention to my credit score 43%
  3. Buying cheap goods 41%
  4. Defaulting on payments and ending up in debt collection 41%
  5. Overspending on credit cards that I can’t afford to repay 38%
  6. Buying a car without knowing what’s involved 37%
  7. Letting student debt accumulate 36%
  8. Getting locked into fixed interest rates 29%
  9. Not investing money while I’m young 26%
  10. Not buying a home/property while I’m young 25%

How TrueAccord Embraces Machine Learning to Create Positive Consumer Experiences in Debt Collections

By on December 23rd, 2021 in Industry Insights, Machine Learning, Product and Technology
TrueAccord Blog

By Laura Marino

TrueAccord’s Chief Product Officer, Laura Marino, was recently featured in the New Standard in Debt Collection panel as part of the Beyond Digital: The Next Era in Collections summit. As a civil engineer turned product management executive, Laura has a unique viewpoint on the evolution of machine learning in software across a variety of industries. In this blog post, Laura shares her perspective on machine learning at TrueAccord and in collections, in general.

At TrueAccord, we know that consumers prefer digital channels and self-service. We also know that just providing the digital channels is not enough. To truly engage with consumers we need to help them throughout the journey. This is where machine learning comes in.

What is machine learning?

Machine learning is an application of artificial intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. In the context of collections, and specifically in the context of our consumer-centric approach to collections, machine learning is a wonderful tool to personalize the experience for each consumer, effectively engage with each of them, and ultimately help resolve their debt.

There has been so much hype around machine learning, but often companies that claim to do ML are really using fixed rules or heuristics (if a consumer does X, then do Y) without including any of the automatic learning and improvement. Or they may be using ML for a very specific, very limited scope – like automating some consumer support responses. The reason that leveraging ML is so difficult for something as complex as collections and recovery is that it requires a lot of expertise in data science and behavioral science, it requires a lot of user research, and it requires a lot of data.  This is not something that a company can decide to start doing overnight as an add-on.

How does TrueAccord apply machine learning to debt collection?

TrueAccord is leveraging machine learning and behavioral science throughout the entire journey, from initial engagement all the way to resolution. We were built specifically around the hypothesis that focusing on machine learning-driven, digital-first experiences was the way to transform debt collections. We have been doing this since 2013, and we have orders of magnitude more data than anyone else. Just to give you an idea: we send millions of emails per day, and hundreds of thousands of text messages per week and our ML engine learns from every open, every click, every action on our website, and every interaction with our call center agents. Because of all of this, we have something that is very hard for anyone to imitate.

Unlike traditional collections, we do not use demographic data like age, zip code, or creditworthiness to personalize the experience. Instead, we use engagement data about how the consumer responds at every step in the process.  

We have handled debts for over 24 million consumers and we have collected data about each individual interaction with those consumers. That wealth of data, combined with our ongoing user research is behind the ability of Heartbeat (our fully automated and reactive decision engine) to personalize the experience for each consumer.  We’ve seen this data-driven machine learning customer-centric approach lead to increased customer satisfaction, better repayment rates, and lower complaint rates.

Machine learning is used to personalize and optimize every step of the customer journey. The first thing we need to do is to effectively engage with the consumer.  For that we have several models: 

  • Cadence optimizer: determines the right cadence to communicate with each consumer about their debt. Specifically, it determines which day to send the next communication. We don’t have a fixed rule that says “send an email every x days.” Our decision engine decides it dynamically based on the type of debt, the consumer behavior, and where they are in the process. 
  • Send time optimizer: determines when during that day, communication should go out. A working mother who is busy with her kids in the morning and in the evening is more likely to check her messages in the middle of the day during her lunch break. A construction worker has a very early start to their day, may prefer to check messages at the end of the day.  We want our consumers to receive our communications during their preferred times so that they are at the top of their inbox and not buried under 50 other emails. Reaching people at the right time of day has a big impact. Due to our send time optimizer, we saw a 23% increase in liquidation for certain types of debts. 
  • Email content rater: we also want to make sure that the tone of our communication is one that will best resonate with a specific consumer. For each piece of content we send out, our content team has created multiple versions with different voices, ranging from very empathetic to more ‘to the point’ because different people respond to different styles. Heartbeat chooses which one to send based on what it has learned from the behavior of each consumer. 

After engaging the consumer with the right cadence, timing, and content we want to make sure that they commit to a payment plan and stick to it until their debt is resolved. For that, we have machine learning models that determine the best combination of discount and length of payment plans to offer to each consumer. The options that the consumer sees when they get to the payment plan page are tailored to them based on what Heartbeat believes will work best. The consumers can build their own plan but, if we can proactively offer options that work, we make it easier.

We also have a ‘payment plan breakage model’ that helps us identify consumers who are at risk of not making a payment so that we can proactively reach out to them and give them options. With this we were able to increase the resolution rate among customers at risk by 35%.

What do customers think about TrueAccord’s model?

We have a lot of very positive feedback from our consumers which I attribute very much to our machine learning capabilities. It is one of the things that I think is so exciting for everybody who works at TrueAccord. We consistently get messages saying, “Thank you for making it so easy. Thank you for allowing me to do it via digital channels without having to talk to anybody.” And then when people call with questions, our call center knows that they’re there to help. People definitely respond very positively to the approach we’re taking to collections.

This content originally appeared as part of the Beyond Digital: The Next Era in Collections summit. Watch the entire summit here. 

Klarna’s Digital Debt Collection Journey: Outsourcing Without Sacrificing the Consumer Experience

By on June 15th, 2021 in Product and Technology

Klarna, the highest-valued private fintech in Europe, is on a mission to make shopping simple, safe and smooth, for both consumers and retailers, through its suite of payment products and services. From its inception in 2005, Klarna has not compromised on providing a seamless consumer experience — even when it comes to consumers in collection. 

With a high standard for customer experience and in an effort to integrate collections seamlessly with their product, Klarna initially opted to keep collections in-house. For five years the company had great results with in-house collections, but as Klarna expanded to new markets and added new products, scaling in-house collections while maintaining a best-in-class customer experience strained the company’s resources and became less feasible. 

This led Klarna to begin considering a third-party collection partner. By this time, the collections industry had evolved. New players like TrueAccord were building digital-first collection solutions that vastly improved the customer experience via personalized outreach, flexible payment plans, and a self-optimizing, machine learning-driven performance engine.

It’s easy to underestimate the expertise involved in building an effective, compliant digital debt collection engine, and partnering with the right collection solutions provider would free up valuable internal resources. Klarna’s priority was to focus on their core business and engage an expert partner who would be able to build a world-class collection operation for them — one that would only enhance their consumer experience while not sacrificing brand image. 

“We look at collections partners the same way we look at hiring team members: we only want to work with the absolute best. We wanted to partner with a company that truly takes care of consumers,” said Jan Hansson, VP Debt Collection, Klarna. 

Other key considerations to moving away from in-house collection included, data science expertise, engineering talent, compliance resourcing and industry knowledge. After doing their due diligence, Klarna decided to partner with TrueAccord as a collection solution provider. TrueAccord stood out from competitors in two important ways: customer centricity and digital and multichannel capabilities.

By partnering with TrueAccord, Klarna was able to increase liquidation rates and achieve better holistic results, with retention rate a key indicator. Moving to a partnership with TrueAccord from in-house collection also allowed Klarna to free up valuable internal resources and refocus on their key business functions. Klarna is now expanding their engagement with TrueAccord to include more accounts and looks forward to growing the partnership even more in the future. 

“We are so proud to work with TrueAccord,” said Sebastian Siemiatkowski, co-founder and CEO, Klarna. “Putting technology to use for the people instead of against the people is the next generation of tech.

To learn more about TrueAccord’s work with Klarna, read the full case study or check out our recent webinar, “Digital Debt Collections 101 with Klarna”.

How the collections industry can serve consumers in times of economic uncertainty

By on July 13th, 2020 in Industry Insights

Debt collection is a highly regulated industry and as such, is notoriously slow to change. While there are a number of reasons for this, the end result is a growing gap between consumer’s expectations and the services creditors offer.  

TrueAccord’s recent report, Consumer Debt in the Age of COVID-19, found that during times of economic uncertainty, this gap can grow even wider. Repayments may be irregular for the foreseeable future, so when consumers do choose to pay, it’s up to collectors to make the process as simple as possible. Now more than ever, it’s clear that the collections industry needs to catch up with other financial services and provide modern solutions for the consumers it services.

Debt collectors can pave the way for an improved consumer experience with context-aware messaging, flexibility, and opportunities for consumers to engage on their own terms.

Use Context-Aware Messaging

A consumer’s relationship with a debt collector begins well before any payment activities. While this relationship has traditionally been built on a series of letters and phone calls, today, it’s crucial to leverage digital channels and a context-aware approach. 

Consumers expect a personalized experience from their financial services, and debt collection should be no different. Customizing communications based on context improves engagement and enhances the customer experience. To succeed, digital debt collectors must leverage their messages from robust content libraries, selecting the right communication at the right time.

A key part of finding the “right” message is striking the right tone. Financial hardships are challenging to navigate and as a debt collector, being patient and offering solutions can make a world of difference. 

At TrueAccord, our machine learning engine, Heartbeat, chooses the “right” message to send from thousands of legally approved communications based on the millions of people TrueAccord has worked with in the past. We’ve found that the right content in an email can increase click-through rates by 20%. 

To be sure, optimizing content is about tone and timing — not increased frequency of communications. In fact, there are many safeguards in place to protect consumers from email overload. Not only will email service providers identify those who over-email as spam, but consumers can also independently unsubscribe or flag messages as spam if they feel harassed.

Provide Flexible Options

Offering consumers flexible payment options is not only better for customer experience, but it can have a dramatic impact on payment plan retention as well. Our research shows that consumers are 50% less likely to drop off of a flexible payment arrangement. 

While flexibility has always been a differentiator for debt collectors, it is especially important during times of economic hardship and uncertainty. Consumers are more likely to begin a payment plan if they are confident that they can adjust their payments to accommodate uneven or unpredictable cash flow. We’ve found that consumers are more inclined to pay off debts that they feel are manageable and are owed to a company they trust.

Introduce Self-Service Options

Today, consumers take care of most of their financial needs without ever talking to a human, and paying a debt shouldn’t be any different. Online self-service tools have become the norm across financial institutions and debt collectors need to follow suit to best serve consumers. 

All debt collectors should set up a payment portal so that consumers can seamlessly make payments online. This type of self-service tool reduces friction for the consumer by removing the need to speak to an agent and allowing them to pay at any time, not just during business hours. Our data shows that 17% of consumers access our website before 8:00 a.m. or after 9:00 p.m — times when they could never talk to an agent. 

To truly match the convenience of online banking, digital tools must also allow consumers to take a variety of actions including (but not limited to):

  • Adjusting the length and installment amount on their payment plan
  • Deferring a payment
  • Disputing all or a portion of their debt
  • Entering bankruptcy information
  • Applying for a hardship pause on their debt.

Implement Smarter Staffing

In times of national economic uncertainty, payments are likely to be inconsistent. For example, during the coronavirus crisis, we may see spikes in payment activity as individuals receive governmental aid or businesses are able to hire back their workers. Unfortunately, staffing becomes very complicated when there is uncertain demand. On top of that, operating a call center is currently harder than ever, with most states still requiring staff to work from home—a challenge for compliance, IT, and HR. 

One step companies can take is to prepare for spikes in payments based on leading indicators of future demand. These can include factors such as economic indicators (like unemployment rate), governmental aid programs (like the CARES Act), and consumer digital engagement trends (like click-through rates on emails). While these indicators won’t provide enough time to train a whole new team of agents, they may signal a good time to bring in your seasonal staff.

But in order to succeed in the long-term, debt collection agencies must introduce a digital-first model. Once someone decides to pay a debt, having digital payment options alleviates pressure on the call center. At TrueAccord, 95% of consumers resolve their debts without ever speaking with an agent. 

Needless to say, humans are still crucial. While machines are great at handling routine requests, there is no replacement for a well-trained agent to help customers with more complex situations. However, with the help of digital tools, each agent is more efficient. At TrueAccord, each agent is able to service more than 80,000 accounts (and counting) vs. a traditional agency’s 1,000-2,500. This type of hybrid model provides the best possible customer experience, even during busy times.


During times of economic uncertainty, debt collectors must adapt to an operating model that empowers consumers to manage their debts in the way that makes most sense for them. Based on historical trends, as well as the consumer behaviors we’ve seen in the first few months of the coronavirus pandemic, we recommend that all companies collecting debt should use context-aware messaging, provide flexible options, introduce self-service options, and implement smarter staffing.