Few would disagree that third party debt collectors are in the communication business. They communicate with consumers in writing and they communicate with them by phone. In some countries they even communicate with consumers in person.
Historically, the debt collection industry’s approach to consumer communication has been to write scripts and design work flows around the type of debt being collected rather than the characteristics of the consumer from whom the debt is being collected. In other words, the focus has been on whether the debt is a credit card debt, a healthcare debt, a utility debt or a purchased debt, to name just a few, rather than the type of communication used to discuss the debt with the consumer.
This is Part One of an intended series of articles that I hope will present a new way to approach consumers when communicating with them about a past due obligation and asking them for payment. I also intend to challenge regulators and lawmakers to dispel the notion that all consumers demand and require a one size fits all law regarding communication. They do not.
The two most significant generations for us to understand – from a debt collection perspective – are the millennials and the seniors. Each group represents a significant population of people who owe a significant amount of past due debt. Today, I will focus on the millennials.
Profile of the Millennials
The millennial generation is composed of people under the age of 25. They are currently experiencing an unprecedented level of high unemployment. In May of 2010, unemployment for 21-25 year olds was 15.8%. Today, unemployment for those who are college graduates is three times higher than the historical average.
To complicate their situation, 26.9% of the millennials are uninsured. The second most likely age group to be uninsured is made up of 26-34 year olds. Of this age group, 25.9% are uninsured. Together these two age groups represent the highest percentage of uninsured in the U.S.
The millennials are experiencing a dramatic rise in student loan debt. For the first time in recent history, outstanding consumer loan debt hit $829 billion, exceeding credit card debt ($826 billion) for the first time. Student loan debt is also growing faster than credit card debt within the past three months.
The millennials debt load is rising in general as compared to previous generations. Families with heads of households under the age of 35 have the highest leveraged ratio of debt compared to all age groups.
Americans in their early 20s have a notoriously short attention span, and this certainly applies to millennials. Their preferred methods of communication include text messaging, social media, and mobile phones. They abhor email communications unless the emails are pushed to their smart phones and even if they are pushed to their smart phones, the millennials will generally not respond to emails. Email communication is actually cumbersome to the millennials. They want immediate access to information and immediate responses to their communications. For this reason, text messaging serves them well.
To put this into the current recovery context as an immediate action item, I think collection letters targeted to millennials need to be short, simple, and to the point.
The millennnials are community-influenced. This means they seek information from their peers before making many decisions. And they seek their information almost exclusively online. They are not likely to first seek information from a single source or a traditional authority figure such as a parent, a doctor, or a family friend. Instead they will seek information from social media sources that represent the collective wisdom of many.
This demographic is also highly transient and difficult to find. They are more likely to be located by way of their phone than at a permanent residence. Not surprisingly, the millennials are perfectly comfortable being tracked and targeted. But as a consequence, they are fiercely protective of their mobile phone number and will go to extraordinary lengths to maintain their mobile phone number over time regardless of expense or inconvenience.
Of critical importance to lawmakers and regulators should be the fact the millennial generation has very few privacy concerns. They care about access and convenience – not privacy. They will tell you when, where and how to reach them if they want you to do so. If not, they will be difficult to contact.
The constraints presented by the Telephone Consumer Protection Act (TCPA) regarding the use of auto dialers are archaic. The millennials are perfectly capable of informing the debt collector whether it is convenient for them to receive calls or text messages on their wireless phones as already permitted by the Fair Debt Collection Practices Act (FDCPA). In short, the consumer should control the decision as to who and how they may be contacted on their wireless phone/computer rather than the government and the law needs to catch up with technology.
Takeaways About the Millennials
- If you send them an email they probably won’t reply.
- If you leave them a voice mail message they will probably not listen to it. If they do, it is unlikely they will call you back. If you try to make them feel guilty – you will fail. They are fiercely independent.
- They don’t really care about buying a home – especially right now — but will go to extremes to protect their mobile phone service.
- They will Google your company’s name before they pay you, and if they want to find out how you operate and treat people, they will follow the blogs.
- If they have some money to pay you, they would prefer to do so electronically. Recurring payments don’t particularly bother them as long as they can pay you via online banking.
- If you give them an app to help them pay by phone they will appreciate you. Don’t ever expect them to mail you a check.
- If they tell you they don’t have health insurance, they probably don’t.
- If they tell you they are unemployed, they probably are.
- If they tell you they live at home, they probably do.
I look forward to receiving your comments and question and hope to spark a dialogue about consumer communication preferences and the need or lack thereof for more layers of consumer protection legislation and regulation in an age when less is arguably more.
Later entries in this intended series will focus on the senior population, social media norms across both generations, and applicability of these concepts to the healthcare ARM environment.
Sources for this article include: Department of Health and Human Services, National Center for Health statistics, May 2009; CTIA The Wireless Association, 2010 Year End Figures; Forrester. If you would like additional information about the research and supporting resources used to prepare this article please feel free to contact the author Rozanne M. Andersen, Chief Compliance Officer and Vice President of Government Affairs, Ontario Systems LLC, a leading software company for the ARM industry at firstname.lastname@example.org or Melissa Jenkins, Senior Director, Strategy & Business Development, Ontario Systems LLC at Melissa.email@example.com.