In a recent update to their forbidden message categories, Twilio, a customer engagement platform that offers SMS / text messaging, emails, and other outreach methods, made it clear that using their long code, short code, or Toll-Free messaging for third-party debt collection is a no-go.
It's yet another sign that Regulators and Chief Compliance Officers aren’t the only forces to contend with when it comes to your omnichannel debt collection strategy and using SMS / text messaging for debt collection & recovery. Carriers such as T-Mobile have already moved to restrict debt collection messaging, but this may be the first instance of a digital communications platform shutting out debt collection messages. If this becomes a trend, it could create major headaches for lenders and their third-party partners.
Twilio cites third-party debt collection as a prohibited use case, not just prohibited content, which seemingly means that messages from third-party collectors are prohibited even if the content of the message doesn’t specifically mention debt collection.
What does that mean for collections & recovery executives at creditors and lenders?
If you’re using Twilio…
This change does not apply to first-party creditors or collections, only third parties. So, if you’re using Twilio as a communication platform to text customers about a delinquent or even charged-off account as a first-party, nothing should change.
If your third-party agency partners are using Twilio…
They won’t be able to use the Twilio platform to send text messages to your customers anymore. Twilio provides some alternatives to using text messaging, like their email and programmable voice APIs, but those channels are not as effective as text messaging in generating right-party contacts and driving self-service.
Customers prefer texting over other outreach methods, especially phone calls. Without the ability to send text messages, third-party agencies can’t meet the customer where they want to be met. It’s a huge disadvantage to agencies who don’t adapt quickly. If your partners don’t have another resource lined up to deliver texts to customers, they will see a reduction to RPCs and lower performance. Be prepared to search for third-party agency partners who have been able to adapt.
It’s also fair to envision a future where third-party debt collection becomes a forbidden use-case on other platforms similar to Twilio. Collections & recovery executives should engage with their agency partners to develop strategies that can withstand the loss of this extremely valuable outreach option. If that becomes impossible, creditors and lenders may have to turn to first-party collections & recovery strategies, which are more expensive and require more resources than outsourcing to a third-party agency.
This change by Twilio is a major blow to third-party agencies who are using their text messaging service, especially because of the call cap provisions in Regulation F.
It’s also especially troubling because third-party debt collection is lumped in with other forbidden use cases, like gambling, illegal substances, and “get rich quick” schemes. Unlike the other forbidden use cases, debt collection is a vital part of a healthy economy. Reducing the number of ways to reach consumers only hurts consumers in the long run by increasing the cost of credit and limiting credit access.
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