The Importance of Compliance in the Collections Industry
We find, in The Odyssey, this debt collection effort:
At daybreak I’ll be off,
to see the Kaukonians about a debt they owe me,
an old one and no trifle.
-Homer
Well, some things never change. Where there’s money, there’s also unpaid debt. But many things do change, and the technology available for collection is one. Tired of your client dodging your calls? At least you no longer need to sail off to another land to get an answer!
Technology Improvements
Technology can make a very big difference in debt recovery efforts.
Take, for example, timeliness. It’s well known that recovery rates drop precipitously the longer a client is overdue. It wasn’t that long ago that every attempt to collect was handled via a person-to-person call (often unanswered) or via “snail mail”. Then the consumer had to use the same methods to respond. Those tactics, though still of some use today, now sound mostly outdated, thanks to rapid advances in technology. Most people are accustomed to immediate methods of payment (like credit cards) and online payment portals.
Another goal in debt collection is client retention. Technological advances help here, too, as with Optio’s Talking Statements®. Clients often feel less threatened when a recorded voice advises them of an overdue balance than when a fellow human does, especially if they know that human is a debt collector! The Talking Statements® option solves these issues by addressing the customer with a friendly recording that allows them to pay directly if the overdue debt was a simple oversight, or be transferred directly to your business if they have questions. This technology also saves a lot of time and money since no one needs to manually dial through lists of names and numbers and no interaction is needed unless the client requests it.
Technology Concerns
The items we’ve discussed so far are really only a glimpse of the big picture. Advances in technology over the last 50 or 100 years are shocking. And it seems the full impact of a new technology is barely being assessed before it’s being replaced by something else! But advances in technology can often cause as many concerns as they alleviate, leaving us adrift in a sea of uncertainty.
For example, texting and social media sites like Facebook are becoming the primary methods customers choose for person-to-person communication, and these methods may help recover unpaid debt, too. Right now, though, these are fraught with controversy — regulations haven’t really caught up, leaving unanswered questions about the impact on the consumer, such as extra charges on mobile phones and maintaining financial privacy on social media sites. And let’s not forget about identity theft concerns — how do we protect the huge amounts of information now being accessed and stored?
However, these questions are being discussed and addressed. The Federal Trade Commission (FTC), tasked with protecting consumers from unfair debt collection practices, held a 3-day conference on 28 April 2011 discussing the impact of new technology in debt collection. If you’d like to know more about where the winds of technological change might be taking us, here are some excellent resources to review, including transcripts of those sessions:
-FTC Report: Collecting Consumer Debt: The Challenges of Change http://www.ftc.gov/bcp/workshops/debtcollection/dcwr.pdf (pdf download)
-Bureau of Consumer Protection: Business Guidance on Privacy and Security
-FTC Debt Collection 2.0 Workshops — click on Webcast, then scroll to the appropriate date’s session if you’d like to see the videos, or click below for the transcripts.
For those in the debt collection industry, sound judgment based on known fair practices can guide our journey through the new frontiers. The laws already given in the Fair Debt Collection Practices Act, for example, while they don’t address Facebook specifically, do show us what the concerns are with debt collection on a large scale. So if a postcard with overdue debt information can’t be mailed, then it makes sense that a public Facebook wall post would be unacceptable, too.
These days, we’re spared from having to sail across the world to collect a debt (and our clients are spared that knock on their manor door), but new complexities have arisen with new technology. Careful consideration of consumer impacts, both good and bad, would seem to be the wisest course.
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