Home > Managing Debt > Will Your Next Debt Collector Be a Robot?

Comments 0 Comments

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.

More on Managing Debt:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team