More companies in collections / recovery should be using email as a key consumer communication channel. The reasons are clear. 50% of consumers prefer to receive communication from brands via email, plus email is a cost-effective way to contact consumers, whether it's used in lieu of a letter or a phone call. So, why aren't more companies in recovery / collections using email as a major contributor to their digital debt collection consumer contact strategy?
There are several common compliance myths related to debt collection email best practices holding the industry back. Here are three of them. Don't let them dissuade you from using email more extensively to improve your digital debt collection strategy.
Myth #1: Creditors must send a handoff letter or email to consumers before a third-party collector can use the email address for collection emails.
Reg F outlines how to use email to reach out to consumers once the debt is passed to a third party debt collector, and it places a lot of the onus on the creditor.
Reg F does discuss creditors sending a hand-off letter or email to the consumer before passing the email address to a third party agency. However, the process outlined in Reg F is a safe harbor, not a mandate.
Based on a recent survey of Consumer Relations Consortium members, many creditors have elected not to take this extra step. That doesn’t necessarily preclude a collection agency from communicating with a consumer via email. Whether or not an agency elects to communicate via email without a handoff letter will depend on risk aversion. Operating outside of the procedure provided in Regulation F may present the risk of an (alleged) third-party disclosure; however there is nothing prohibiting agencies from using email without a handoff letter.
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This concern only applies in the case of email addresses passed from creditor to agency. Agencies can also take steps to get consent from consumers themselves. That starts with soliciting consent and preference any time a consumer is interacting with your organization, whether that is on the phone or via your self-service portal.
Myth #2: Collection emails only take the place of physical letters.
According to Drew Marston, Senior Director of Digital Integration at Resurgent Capital Services, you absolutely should start developing your email process using “transactional emails.” This includes emailing administrative documents to consumers, like payment confirmations, for example.
Starting with sending that information via email will help your organization build a successful email process. Then, you can build on that process.
Because emails are a low cost way to contact consumers, emails can (and should) be integrated into your digital debt collection strategy not as a substitute for physical letters, but as a discrete third option in addition to phone calls. 75% of consumers report using their cell phones to check email. Using varied, marketing-style email content opens up a new way to reach consumers, and is a great way to drive consumers to your self-service portal, where they can handle their account anytime, anywhere. (PS - this is a good time to remind you that your self-service portal has to be mobile friendly!)
Myth #3: There is no limit to the number of collection emails you can send to consumers.
On the other end of this spectrum, there is a belief that because there are no explicit restrictions on the number of emails you can send to a consumer, emails can be sent as frequently as you want. But sending too many emails presents at least two major risks:
- A potential (alleged) violation of the FDCPA due to perceived harassment
- SPAM labeling due to, well, spamming the customer (which results in a poor email reputation)
The strategy behind email is using it at the right frequency and with the right messaging. This will vary not only based on the type of account you’re servicing and the kind of consumer you’re trying to reach, but based on your organization’s technical abilities and content management strategy. Without a library of email content, sending frequent emails doesn’t make much sense. Organizations should develop a wide array of emails, and test them to determine what kind of messaging works for account populations.
Erin Kerr is the Director of Content at insideARM and the chair of iA Strategy & Tech - a digital resource for collections strategy executives. She is a seasoned receivables management professional, with recent experience in digital strategy and a passion for crafting digital solutions for a better customer experience.