In the months and years ahead the collection industry will rely more and more on text and e-mail messages with consumers to collect delinquent accounts.
This is driven by the fact that millennials are simply declining to answer the phone to speak to a bill collector —or anyone else.
What’s more, from the consumer’s perspective, a digital conversation concerning an unpaid account is a much less confrontational social interaction than a telephone call with a debt collector.
Successfully collecting an unpaid account is a two-step process:
- The first step is to bring the existence of the delinquent account to the consumer’s attention.
- The second step is to persuade the consumer that this particular account must be resolved in a timely fashion.
Companies employ collectors today because, with a few exceptions, they are required to accomplish step two.
As a general rule, the larger the unpaid balance the more critical it is to get a consumer on the phone to finalize a payment.
The only accounts where consumers might pay a delinquent account solely on the strength of a written demand for payment are balances under $1,000.
Up until a few years ago, the collection industry was limited to communicating with the consumer by regular mail and telephone.
This way due to several factors including technology, legal restrictions, and instructions from clients.
Historically, large credit grantors, especially big banks, have been reluctant to permit communications other than by regular mail, telephone, and facsimile.
Today some companies are taking advantage of new lanes or communication channels to communicate with consumers.
These include not only text and e-mail messages but also Facebook Pages and other forms of online engagement beyond facilitating online payments on a website.
At Lexop, we believe that better collection stems from better communication.
Our mission is to help collection teams improve and monitor customer outreach, offer a positive payment experience, and optimize collection rates.
While this realignment in communication is taking place, we’ve noticed that payment habits are also shifting.
A few years ago it was very rare to see thousand dollar bills being paid online instantly.
However, our customers are collecting large amounts within seconds —something that was unlikely previously.
Companies using text and e-mail messages must become familiar with relevant provincial and federal laws
It is important for any company using text and e-mail messages to communicate with consumers in a manner that does not contravene provincial or federal law.
It is crucial that the use of text and e-mail messages does not violate Canada’s Anti-Spam Legislation (CASL).
As a general rule, it is incumbent upon the sender of a digital message to have consent when sending a text or e-mail message to a consumer.
It is important to appreciate the distinction between two different issues:
- Communicating with the correct individual
It is crucial for the sender of a text message or an e-mail to be communicating with the correct individual.
It is incumbent upon companies using text and e-mail messages communicating with consumers to have an appropriate procedure for confirming that it is communicating with a person legally responsible for an unpaid account.
Sending an e-mail to an individual where the e-mail address is owned or controlled by an employer has its risks.
For example, when an employee leaves a company his or her e-mails are forwarded to another employee. This scenario raises privacy issues for companies sending an e-mail to a consumer.
A company using a third-party vendor to send out a large number of outbound digital messages should ensure that these messages are not sent to an individual outside the hours when communications with consumers are permitted under provincial law or territorial law.
Companies that cannot adapt to changing times will be left behind
Companies are more and more using proprietary software for communicating with consumers via text message.
As text and e-mail messages become more important as a method of communicating with consumers those companies that are unable to adapt to this new environment will find that more technologically nimble competitors will eat their lunch.