Do your customers trust you? Do you know if they do? Trust has become a big concern, not only for consumers, but also for regulators and the CFPB in particular. Lack of trust will not only hurt your brand, but it comes with increasing regulatory risk, too.
70% of consumers say they want visible signs of security when they engage online, and a majority of consumers reported identity theft as their top security concern, according to Experian’s 2022 Global Identity and Fraud Report, and 83% of consumers report that security is the most important factor in an online experience.
Plus, the CFPB announced last week that failure to safeguard consumer data may constitute unfair or deceptive practices.
Trust - or lack thereof - is an especially big concern for executives in collections & recovery. Consumers may engage online confidently when their loans and lines of credit are active, but that sense of trust can evaporate once an account is delinquent or charged-off, if the consumer has to access their account through different means, and if a third party gets involved.
The good news is, there are practical steps you can take to build and maintain consumer trust, even when an account has been charged off.
Change how you look at “identity”
“The definition of identity is evolving,” says Kathleen Peters, CIO at Experian Decision Analytics.
Traditional personally identifiable information (PII) elements include name, date of birth, and Social Security number, but there are newer data points that can be used to verify consumers, like email address, cell phone number, and IP address. Even biometric identification is becoming more mainstream and popular among consumers.
Different consumers will trust different types of identity verification, too. For example, baby boomers rated physical biometrics as the most secure, and Millennials rated behavioral biometrics as the most secure. Interestingly, consumers no longer view passwords as strong security measures, but see the use of pin codes as about equal with biometrics.
Shifting your perception of identity as only PII to a combination of data points opens up more possibilities for verifying consumers’ identities in a safe and seamless way throughout the collections process.
Provide options - especially when it comes to authentication
Consumers who prioritize security over convenience prefer two-factor authentication, according to the Experian report. What's more, the CFPB announcement explicitly states that organizations who “fail to implement” multi-factor authentication have increased risk of violating the Consumer Financial Protection Act.
However, there isn’t necessarily a “right” way to authenticate consumers, and Peters says “being flexible” when building your authentication process is critical. This might mean providing multiple authentication options, and layering biometric authentication with other, physical authentications like pin codes or multi-factor authentication. But, as the Experian report notes, authentication tools shouldn’t be built independently of each other, as that “creates silos and gaps between channels ripe for fraud attacks.” A layered approach to authentication is the most secure and what’s best for consumers.
It’s not just about the authentication method, either. When collections & recovery executives are building a consumer outreach strategy, they should consider that the outreach itself might help build trust. Peters says to consider the method of outreach, among other things.
“Is it the best way to contact someone? Is it the best time of day? How we engage with consumers is personal, and personal engagements build trust.”
Transparency = trust
Keeping the authentication and online engagement process similar throughout the lifecycle of an account is critical to retaining the trust of a consumer once their account is delinquent or charged-off. Absent the ability to do that, especially in cases where the account is being serviced by a third party, transparency is key.
Only 23% of consumers in the Experian report were very confident that businesses were taking steps to secure them online. When financial services companies, especially those handling accounts in collections, are asking for data from consumers, it’s important to demonstrate why you’re asking what you’re asking.
“The more a person knows about the information being collected, the more they trust the organization,” Peters says.
Organizations should be open about the type of data they’re collecting from consumers as part of their digital debt collection process, and they should explain to consumers every step of the way why they need that data.
Consumer trust will become more important as technology and the use of AI evolves. Digital debt collection will need to follow suit in order to stand up to consumer expectations.
Bonus read: Experian’s 2022 Global Identity and Fraud Report.
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