Prefer to haggle with a robot? Debt collection is going digital, and why it might (and might not) be good — bobsullivan.net

The next time you talk to a debt collector, you might find yourself negotiating with a computer. And you might actually prefer that.

Consumers buy toothpaste and bread without talking to anyone. They get boarding passes for flights with a few taps of a credit card or cell phone. Why not repay a debt with a click or an SMS? After all, many consumers now expect self-service and prefer to perform these kinds of transactions without ever interacting with another human being.

Debt collection goes digital

In April, Experian announced a self-service platform called eResolve, which it says will allow consumers to negotiate and resolve overdue obligations without ever speaking to a debt collector.

This story first appeared on Credit.com. Read it there.

“The eResolve platform negotiates with the consumer on behalf of and at the direction of the customer to resolve their obligation in a frictionless environment,” said Paul DeSaulniers, senior director of risk scoring and trend data solutions at Experian, in an email. “eResolve offers a way for the consumer to interact on their terms, any time of the day or night, using a digital channel that is more preferred to the traditional phone call and avoids aggressive collection tactics.”

A company called TrueAccord got a lot of attention in 2014 when it promised to create a similar digital debt collection platform. CEO Ohad Samet says that since then, TrueAccord has generated many success stories. He claims that more than 60 customers with 1.4 million consumers are “on the platform”. There were “hundreds of thousands” of resolutions – including consumers who could easily click through and tell the company they’d been victims of identity theft or filed for bankruptcy, recovery efforts should therefore cease.

Adios, bad behavior of the debt collector?

It’s easy to see the potential benefits of digital collections. For starters, the obvious: Misbehaving debt collectors top most consumer blame lists, so getting rid of the “human element” can get rid of illegal threats. After all, computers are not frustrated.

“Debt collection is a powder keg. There are explosive situations,” Samat said. “A computer does not tilt (frustrated). You can’t yell at computers and scare them. Although the rise of cold calling bots trying to sell, or even get information from the person on the other end of the phone, has many people against the idea of ​​talking to a bot due to possible fraudulent, which means most consumers end up protecting themselves against robodialers.

The old-fashioned method of debt collection resembles telemarketing and, when done incorrectly, adds a layer of harassment that can violate the Fair Debt Collections Practices Act. Although more phone calls do not mean higher recovery rates, they do mean a greater risk of harassment allegations. Experian and TrueAccord claim that their technologies work to optimize the timing and method of communicating with customers to achieve the best results.

“Consumers want a more transparent and convenient way to settle their debts, without what often feels like an uncomfortable exchange,” DeSaulniers said. “The process aims to make the experience less threatening for consumers and gives them the ability to access their account at any time. This increases the consistency and efficiency of the debt collection process.”

ACA International, a trade association that represents collection agencies, did not immediately respond to request for comment for this article.

Negotiations are simple

Negotiating debt with a computer is exactly what it sounds like.

“First, the lender or collection agency contacts the consumer to remind them of their debt. At the same time, a link to the website is provided to the consumer, who can negotiate payment of their debt without human interaction,” DeSaulniers said, describing the process. “The consumer then logs into the website to submit a reference number associated with their account and then explores refund options. Here, the consumer can negotiate the amounts, terms and payment dates within the parameters set by the lender.

For example: Debtors receive an email with an offer such as making three payments with 0% interest, or 90 cents on the dollar if paid in full. Depending on what the lenders say they will accept, a consumer who declines this offer could get a later pitch for a settlement of 80 cents on the dollar. (Do you know your state’s debt collection statute of limitations? Find it with our handy map of debt collection statutes of limitations by state.)

Samat claims that automated debt collection solves several problems. Foremost among them: thorny regulatory issues. Computers don’t call or text at the wrong time. They don’t use forbidden language, such as threatening law enforcement.

“Because of our machine-based approach, almost every line of text we send (to consumers) is pre-written and pre-approved. It’s much easier for us to be compliant,” he said. He claims that TrueAccord receives 66 times fewer complaints than traditional collection agencies (sample size is still small).

Digital debt collection is also becoming part of modern consumer behavior, Samat said. More than 60% of his firm’s interactions with debtors happen after hours, when it would be illegal to call.

“It’s people at 2 a.m. on their cellphones looking at their options,” he said.

Collection efforts adapted to your behavior

But it’s not enough to stay on the right side of the law. TrueAccord’s computers monitor consumer behavior and learn when it’s best to ping them for resolution. If someone has spent several nights clicking through settlement options, now might be a good time to text or even make a better settlement offer.

“People are different. Some need encouragement. Some need inspiration. Some have to be pointed to the facts,” he said. “We reach the right channel at the right time in the right language.”

Some of that language is fun — a note tells a debtor that a bill feels neglected and is “listening to breakup songs and eating ice cream” because it isn’t paid. According to one consumer report, however, some were more judgmental, even threatening.

“(It’s) like you’re taking advantage of (the debtor), and they’re sort of right,” says one consumer who posted a note citing a TrueAccord email. “Let’s just take care of that balance now and get it over with. It’s not like we’re going to give up. »

Asked about the complaint, Samat said that if the quoted email was really from TrueAccord, it was probably “very old and long disused”.

“It took us a while to find the right kind of honest, clear communication that consumers respond well to,” he said. “And, of course, we have unfortunately seen instances where consumers have confused us with other agencies.”

Dealing with debt collector robots

Of course, even robot debt collectors must obey federal law. Send a cease and desist letter, and the emails and text messages should stop.

But digital debt collection might have a secret weapon: embarrassment – ​​or rather the lack thereof.

“Consumers feel less judged” when talking to a computer, Samat said. “Indebted consumers are scared and overwhelmed. We talk to them in a tone they like…we give them more flexible choices, so they don’t feel like they’re being harassed.

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