The rise of payment apps such as Afterpay and Klarna, paired with unprecedented digital innovation and retail spending, has led to an increase in consumer debt. In fact, reported that consumer credit debt recently reached an all-time high of $986B. What’s more astonishing is that with this increase in debt, consumer spending is also still on the rise.
Add to this a global health crisis that has led to mass and resignations, the creation of new email addresses, and changes in phone numbers, and you’re left with a widespread expiration of once-valid contact data.
For collection agencies, this means a massive undertaking in debt collection practices. As a result, it’s key to understand how data quality is essential to achieving operational efficiency and adhering to rules in this economic climate.
The impact of Regulation F
Collections is probably not the first industry that comes to mind when you hear about digital innovation. However, nearly every aspect of our lives has been affected by this digital wave. So much so that The Consumer Financial Protection Bureau (CFPB) took notice and first announced Regulation F in 2020.
Regulation F provides clearer guidelines around appropriate communication with consumers as you engage in debt collection. These guidelines also include new rules on modern methods of communication. While traditional cold-calling and direct mail are still outreach options for collection agencies, the modern consumer is not only using, but prefers email, phone, text message and social media as modes of communication. USA Today also says that “Americans in their 20s and 30s are experiencing the highest credit delinquency rates”, a group that is clearly tech-savvy.
This change in regulations is huge for collection agencies because it widens the opportunity for outreach and engagement across consumers, but especially among the consumer base that will inevitably receive the bulk of outreach. What’s more, it allows for increased efficiency and a decrease in compliance risk.
However, to take full advantage of this opportunity, it is important that collection agencies commit to an investment in new technology and improved processes. That’s where data quality tools come in.
Where data quality makes a difference
1.Deliver validation notices with ease
As part of complying with collection regulations, you must provide a debt collection validation notice to consumers, a document which notifies them of their debt so that they can dispute in a timely manner.
Traditional cold calling is not the ideal way to deliver these notices, and that’s been the case for quite some time. If you’re unsure why, consider your own habits. How often do you answer calls from unfamiliar phone numbers? If you do answer, how quick are you to hang up once you realize it’s a cold call? For those who endure these calls, how often do you leave the conversation happy that it occurred? You may think to yourself, surely there was a quicker, more convenient way for you to receive this message.
Direct mail is a bit different. Many consumers are choosing to go paperless whenever possible and by diversifying your outreach channels, you can make paperless a clear and readily available option. However, for the many consumers who are still consistently opening their mail, it's vital that you reach them at the right address and in a timely manner.
2. Increase efficiency with limited contact attempts
In digital debt collections, there are limits to how you contact consumers. For example, collectors are not allowed to attempt to call more than seven times within a seven-day period regarding a specific debt notice. Therefore, you need to make the most of all your outreach attempts so that you can achieve your goals while remaining compliant.
Also keep in mind that while Regulation F rules differ between phone calls and modern communication like text, email, and social media, you still need to stay within reasonable outreach limits, including time of day and frequency. These limitations are even more reason to incorporate phone and email into the core of your collections strategy, because by utilizing modern channels, you can meet customers where they are and increase engagement.
Email append solutions are especially useful here, as they take names and addresses and match them to emails. Collection agencies are more likely to have those data sets, and as a result, they can take their current database and append email easily.
Email and phone validation are also useful tools, but to be clear, we don’t mean to suggest phone validation for more efficient cold calling. Rather, it would enable you to kickstart text campaigns and provide mobile notifications, in accordance with regulatory opt-in rules.
3. Maintain compliance
It all comes back to compliance. While Regulation F provides new avenues for collection agencies to conduct digital outreach, its main objective is to protect consumers. As a result, you want to do everything you can to avoid non-compliant communications, and the consequences of them which often include substantial fines and a negative customer experience.
With the right contact data (especially valid emails), you are empowered to make the most of your outreach, provide convenience for consumers, and even provide your own protections by authenticating debtors and reducing the risk of fraud or identity theft.
Experian has the tools you need
Email append matches against a growing database of 1.6 billion unique consumer emails and appends up to 6 emails per exact consumer match. Our services can also be fine-tuned to append what is considered the “best” email, which factors in when the email was created and the frequency of its use.
If you already have a jumpstart on your email database, email validation is another powerful tool which determines which emails on file are actively accepting mail, helping to narrow down which are viable to mail to while minimizing bounces and avoiding IP blacklists. It can also identify which emails are personal or business addresses to ensure the collector adheres to third-party disclosures.
Collectively, these services provide additional insight and utility to consumer emails, supporting a digital collections strategy.
