Will Your Next Debt Collector Be a Robot?

Are the days of debt collectors sitting in cubicles “dialing for dollars” numbered? Debt collection, like many sectors of the economy, is starting to go digital. So if the idea of talking with a debt collector automatically puts your stomach in knots, you may be in for a pleasant surprise: In the not-too-distant future, your debt collector may be a computer.

William Lowe, director of operations for Gluu.org, a firm that writes and supports open source security software, has experienced this firsthand. A billing glitch with a vendor resulted in a rather large and unexpected balance that couldn’t be paid off immediately. The debt was turned over to TrueAccord, which calls itself an “automated debt recovery platform.” His first interaction with them was by phone, he says, but after that, he said it was “very automated — more a 2.0 experience.” Instead of cold calls, he says, he got emails. “Rather than that back and forth haggle between a debt collector,” an online dashboard let him customize a plan, he notes.

Debt collection firms use technology today, including automated dialing systems (aka “robocalls”), skip tracing to find consumers, and predictive scoring to help them identify which consumers are most likely to pay. But in most debt collection operations there is still largely a human component, with collectors trying to talk consumers into paying as much as possible. Sometimes that works well; when collectors can establish a rapport with a consumer, they may even persuade them to pay their firm before others. But at other times, it can backfire, and result in angry consumers who are unwilling to pay, or even lead to violations of federal law designed to prevent harassment.

By contrast, the TrueAccord system is centered around an online dashboard that allows both the creditor and the debtor to view account balances, set up and manage a payment plan and track progress toward paying the debt 24/7. The approach appears to be working: In a March 2015 press release, the company said that in the past six months, it increased the amount of debt under management to $45M and is working with over 60 major companies to collect from more than 40,000 debtors.

Steven Mathis is one of those using the platform to pay off a debt. When Mathis left his corporate job to start his marketing company, Mathis Marketing, he dealt with the growing pains many new firms encounter and accumulated some business debt. He had every intention of paying back what he owed, and was turned off by the collection process in general, which he found “threatening, harassing, combative.”

‘I Felt More Motivated’

But when one of his debts was turned over to TrueAccord, he says the interaction was much more positive. Working with them via email and online, he was offered a range of payments, and was able to customize them to fit his financial situation. It was a “completely different experience,” he says. And because it was more positive, “I felt more motivated to take care of it,” he notes.

New regulations around debt collection are expected to be announced by the Consumer Financial Protection Bureau and may open the door to approaches such as this by clarifying, for example, when and how consumers can be contacted by email. Some consumer advocates hope new regulations will require debt collectors to provide consumers with more information about balances and payment activity, and if that happens, this kind of technology could be poised to fill the gap. Of course, there are drawbacks: some consumers don’t have reliable Internet access, for example. Others may be trying to avoid dealing with their debt and no amount of technology will change that. And still others may prefer to talk with someone by phone. Yet that still leaves plenty of consumers would would welcome the opportunity manage a collection account the way they do other bills — online and automatically.

“The preference for digital is stronger with younger and tech-oriented crowds, and they grow in numbers and overall population,” says Ohad Samet, co-founder and CEO of TrueAccord. “However, the advantage of an automated and data-driven platform is that it can identify and use the consumer’s preferred channel — be it email, SMS or a phone call with a live representative — all channels that our system utilizes when appropriate.”

This isn’t the only company trying to change the industry though technology, of course. Another, Global Debt Registry, is working on creating a central repository of consumer collection accounts, and making that information available to consumers through a free consumer site, DebtLookUp.com. It currently allows consumers to research collection agencies and verify debts they owe to help them avoid scammers. It can track their debts even when they are sold to multiple collection agencies. (Consumers can also see how collection accounts are affecting their credit by getting their free credit report summary on Credit.com.)

How fast and far-reaching these changes will be remains to be seen. But for at least some debtors, it’s already night and day. Lowe, for example, says he’s never had a debt collector send him chocolates for Christmas. TrueAccord did.