If you’re not making it easy for consumers to get what they need from you, you might be violating the FDCPA and FTC Act.
On the edge of the first major recession since the advent of the CFPB, the courts (at least the 11th Circuit) and the regulators agree: the treatment of consumers matters. As origination levels drop and delinquency levels increase, regulators and the courts clearly want lenders to focus on account servicing in general, especially for delinquent and charged-off accounts.
And one area in account servicing where courts and regulators are focusing is wasted time
“Even if the person ultimately gets their money back, the time they spent in the process counts as an injury under the FTC Act,” according to Helen Clark in a recent blog post from the FTC which detailed how everyone involved in the Buy Now, Pay Later ecosystem is subject to the FTC Act.
So what can collections & recovery executives do to ensure they’re not wasting consumers’ time?
Here are three ways to center your collections & recovery process around consumers to protect your collections process from regulatory scrutiny.
1. Support Quick and Easy Inbound Calls
This might seem obvious, but contacting consumers, and letting them contact you, through their preferred channel will reduce complaints and mitigate risk. But don’t assume the consumer wants to chat or text with you or your agency partners.
“Card issuers should recognize that even when consumers are in dire financial circumstances, they still have a preference for positive experiences,” says Robert McKay, SVP of Customer Identity Risk and Solutions at Neustar, a TransUnion company.
Improving the inbound call experience can be critical to saving consumers’ time, especially if outbound email and text message campaigns are focused on driving inbound calls. According to McKay, the inbound call experience can be improved by using “the same data and systems that many organizations have already implemented to support outbound communication.” This means routing calls to agents with the appropriate training to handle the reason for the call, cutting down on wait times, and allowing agents to have quick, easy access to information that will resolve consumers’ questions.
2. Make Your Consumer Portal Experience Great
Of course, some consumers would really prefer not to speak with an agent over the phone. A robust, accessible portal is key to providing a positive consumer experience. Consumers who can self-serve and locate account information on their own time are less likely to complain. Providing the consumer a place to find proof of payment, submit fraud claims or disputes, and get answers to frequently asked questions will reduce friction and improve consumer experience.
A portal that isn’t a one-stop-shop for customer service could increase consumer complaints, too. For consumers who are trying to avoid speaking to an agent, if the portal only half answers their questions, their level of frustration will be even higher when they eventually call in to get a full answer.
3. Find the Right Partnerships
Your vendor partners should be equipped to answer consumers’ questions quickly, and resolve disputes within the timeframe provided within the FCRA and FDCPA. If they’re not, based on the language used by the 11th Circuit and the FTC, you could be on the hook for consumer lawsuits and regulatory scrutiny. You need to work with the right partners, and finding those partners will take a lot of time.
A lot of newer lenders might be intimidated by setting up a new collections & recovery process, and rightly so. We’ve seen major growth in the fintech and BNPL space, and as those fintechs begin to focus on collections & recovery, they need to ask themselves “how to service those specific sets of individuals when times are not as pleasant and when the going gets tough,” advises Dave Hanrahan, CEO of Kredit.
It’s not the dollar investment lenders should be worried about, though. Hanrahan says it’s the time investment that will be most important.
“Invest time now building strong relationships with organizations that align with your values [as a lender],” says Hanrahan.
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