Understanding Debtors in a New Technology Environment
The accounts receivable management industry has long been a leader in adopting certain technologies, like analytics. But decision-makers must now take steps to adjust to debtors' use of mobile communications and the Internet.
The past 15 years has seen one of the largest shifts in personal communications behavior in the history of mankind. Although certain technologies like telephones, radio and television were massive breakthroughs that eventually saw near universal acceptance, nothing has enjoyed a rapidity of adoption like the Internet and wireless communications devices.
Interactions with consumers have changed dramatically due to the adoption of these new technologies. Marketers have certainly adjusted their practices to accommodate shifting consumer behavior. Accounts receivable management companies would be well-served to take a page from the marketers’ book.
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Wireless Substitution
According to CTIA, a leading wireless industry association, at the end of December 2008, there were 270.3 million wireless communication service subscribers in the United States, up from 109.5 million in December 2000. But the explosive growth in wireless subscribers is not the real story.
In the preliminary results of a landmark study released in May 2009, the Centers for Disease Control and Prevention (CDC) said that 20.2 percent of American households had only wireless telephones. The CDC’s National Health Interview Survey (NHIS) also found that 14.5 percent of American homes with landlines “received all or almost all calls on wireless telephones.” Perhaps most shocking, 41.5 percent of adults aged 25-29 lived in households with only wireless telephone service, along with 21.6 percent of adults aged 30-44.
The fairly recent phenomenon of consumers giving up their traditional landline service in favor of wireless communications – dubbed “wireless substitution” – has unique consequences for the collection industry. As lawmakers cling to antiquated regulations surrounding wireless phone service, communication with debtors is becoming increasingly difficult.
But creditors and ARM companies secured a victory in January 2008 when the Federal Communications Commission (FCC) released a declaratory ruling that the prior express consent requirement of the Telephone Consumer Protection Act (TCPA) is satisfied when a debtor provides a cell phone number to a creditor during the transaction that results in the debt owed (“FCC: Collectors May Call Cell Phones with Autodialers, Prerecorded Messages,” Jan. 7, 2008). The ruling eliminates the need for collection agencies to obtain separate consents before placing automated collection calls to debtors via their wireless phones. The January ruling was subsequently challenged by a consumer advocate and potential revision of the FCC’s position on the matter is still pending (“FCC Asks for Comments on a Challenge to Collectors’ Use of Autodialers to Contact Cell Phones,” March 26).
Regulations are still in place that make contacting a debtor by cell phone an unclear legal proposition. But most wireless devices are enabled to send and receive a new kind of communication medium: text messages. While contacting debtors with traditional calls on their wireless phones is an area that needs to be ironed out, texting opens a new channel for collectors’ interactions with debtors. (More can be found on leveraging text messages in the Ask The Experts feature, "Using New Technology to Reach Debtors."
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Comments
Comment from Live Wire on September 23, 2009 at 2:38PM EST
Patrick, our company GoLiveSMS has found a legal way to use an autodialer system to text message cell phones without consent. And we have a written legal opinion available for anyone's review.
Chris Baggett CEO www.golivesms.com
Comment from DB-Admin on September 23, 2009 at 8:17PM EST
The industry should now be aware that the Courts have ruled that the Federal Trade Commission erred in its opinion regarding cellular phones and that the FTC is prohibited from creating law where there is no legislative authority. Call cell phone and be prepared for an TCPA action.
Comment from PublicServiceMsg on September 23, 2009 at 12:04AM EST
You can find my "PublicServiceMsg" in a number of the forums. I have worked in the collection industry over 20 years. I was trained by the old dogs of the 70s and 80s and have watched the changing industry. Make no mistake; if we do not fix our backyard, it will become eminent domain of the FTC. In addition, I advise on the right and wrongs of the collection industry. "Doing the right thing" is all our responsibility. Our fellow agencies need to stop allowing the violations and make better collectors.
Comment from MAJ on September 24, 2009 at 1:10PM EST
To: DB-Admin
Did you mean "FCC"
Comment from Per Elvebakk on October 2, 2009 at 10:46AM EST
After having introduced text message reminders to debtors cell phone in Scandinavia, our firm Invoicia has improved the debt collection recovery by more than 15%. Important to give details of all payment details in the text message.
Comment from paybill on October 2, 2009 at 11:10AM EST
We must be able to call cell phones, send emails and text messages if our industry is to survive. This should be ACA's or any other industry organizations NUMBER 1 PRIORITY.
Additionally, the article makes a good point about the internet complaint sites. I religiously check these and respond to all of them. I will not let a debtor go and slander our name with falsehoods and misunderstandings. I would recommend all agencies do the same, you would be amazed (or maybe not) at the hate and venom that is spewed from individuals who received goods or services and now doesn't want to pay for them.
Comment from JCT on October 2, 2009 at 11:35AM EST
An interesting discussion will be whether SMS constitutes a letter or a phone call (the only dunning methods described by FDCPA). Even cell providers admit the SMS is unreliable, and that there is no guarantee of when or if a message will be delivered at all. Furthermore, the transportability of phone number/area codes complicates time zone calling restrictions, as sooner or later someone will complain that calls need to restricted based upon the most conservative expectation, rather than assuming that a debtor with a traditional Pacific time zone area code is in that time zone at the time of the call. There is also the issue of possible third party disclosure with SMS, as well as the issue of harassment from "frequent" SMS reminders. Just be prepared... this Congress and Administration is far from being "collections friendly".
Comment from Anonymous on October 2, 2009 at 1:42AM EST
And what about calls that are made to someone on their cell while they are at work? How many people turn off their phone at work? Very few, because most of their family and friends "respectfully" know when to call. And what happens when the collection calls put someone over their minutes or text allowance? Not everyone can afford unlimited text and minutes. There will be disputes filed with the cell phone companies saying the collectors need to stop calling their number and they are not responsible for paying for the minutes or the text messages that were charged to their account.
Comment from MJ on October 5, 2009 at 12:48PM EST
Tell you what...why don't one of you guys go out there and start texting 3rd Party debtors. Until the FTC clearly revises the FDCPA to address emerging technologies like this, I'll gladly sit on the sidelines and let someone else be the "legal precedent".