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  • Writer's pictureStayAhead Editorial Team

“It will be a customer-driven collections,” says Regulation F. Is it a boon or bane?

Reg F is changing collections

Everyone in the accounts receivable operations have been reading about Regulation F This will go into effect in less than 60 days . It’s now a race against time for agencies to ensure that they are ready to serve the consumers through omnichannel and still stay compliant.

The Bureau of Consumer Financial Protection (BCFP) has put more power in the hands of consumers through these new amendments governing the activities of the debt collectors by focusing more on communications and related practices. Simply speaking, now the consumer can decide which communication method to use and can clarify the restrictions of time and place used by the collections operation to communicate.

At first glance, this might look like the agencies are at a disadvantage. There are far more benefits, however. Since consumers have a choice to choose the communication method, they could certainly opt-in or opt-out on a specific mode. This means that now agencies need to build in a mechanism to capture the consent from every consumer on the mode of communication. At least for fifteen years, the two commonly used communication methods were mail followed by telephonic calls. Agents were trained to handle phone calls and all trainings were focused on that one channel of communication. Also, technology providers were primarily focused only on these two channels and most of the software systems in the marketplace were built to integrate with these communication platforms. Data vendors were focused on scrubbing or enriching data pertaining to calling and mailing only.

This shift in consumer preference is forcing organizations to be prepared to offer alternate channels for consumers if they choose the common default method – either mailing or calling. This would call for investment in implementing additional communication options such as emailing and texting to ensure these platforms are integrated with the collection software. In fact, agencies are scrambling to get these new channels in place before the deadline, Failing would leave them to continue with current channels and limit them from effectively operating and increasing their recovery.

Since an email or text message in lieu of a call or a postal mail would only be a fraction of the cost, agencies could leverage these newer communication channels and reduce their operating costs. However, one needs to have the necessary consent from consumers to move them to these new communication modes. If they could improvise the success rate with these platforms, there could be significant cost savings because one need not have a dedicated FTE's on the phone to handle these communications but deploy automated bots instead to have first level communications with the consumers and engage them in meaningful conversation. Using attended bots, agencies can automate certain tasks. Using workflow, robots can communicate effectively with the consumers by fetching the needed information from the database and – if needed – can escalate the call to a live agent to continue the conversation.

Re-skill and Up-skill It is must that organizations train their agents to handle effective communications through these new and alternative mediums as well as be trained themselves to manage the automation bots. With more and more citizen developers coming up, we are seeing end users developing their own robots and automating certain tasks and even sharing them with other user groups to address the same or a similar use case. Though it sounds easier, not all users will be motivated to learn and build their own bots, but they should be trained to manage these digital workers and control its actions. With the Fair Debt Collection Practices Act (FDCPA) allowing organizations to explore and use these new channels, agencies can now gather all the analytical data generated from these digital campaigns, track active consumer engagements, and work accordingly to fine tune them for maximizing the yield. It is also observed that consumers prefer digital engagements over the traditional phone calls and postal mails. In the next couple of years, there very well may be a complete change in the way collection agencies even operate. If not already, business unit leaders need to start the digital-first approach within their collection operations and prepare for future-ready. We are already seeing the growing population of GenY’s and GenZ’s showing a big interest with these new platforms and indicating their preferences for such digitized engagements. With the new regulations going into effect, it’s important to notice that it’s not the creditor or the collection agency that controls how and when to communicate; it is the consumer who determines it. Truly, it will be a customer-driven collection approach and it’s important that today’s business leaders leverage the new technology advancements and take full advantage of these regulatory actions in order to maximize returns.


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