A significant component of a collection agency’s success hinges on effectively communicating with consumers, minimizing outstanding accounts receivable, and maintaining a healthy cash flow. One of the most crucial aspects of this process is using effective and efficient consumer outreach strategies. In recent years, technological advancements and regulatory updates have allowed collection agencies to explore alternative methods to traditional paper-based communication, including email communication.

According to a Transunion Third-Party Collections Industry Survey, 98% of companies use letters, 93% still use voice (telephone), and 69% use email. However, the use of text is slowly expanding, with 40% of companies using text or SMS messaging. Thirty-one percent of companies were considering adding text messaging to their channel options in the next two years. Twenty-nine percent of companies plan to add chat boxes or digital assistants to their mix.

Although the data is trending toward digital channels, email is still the most used of the digital channels, with 69% company adoption. Email will continue to grow, especially when implementing payments, receipt confirmations or other complex matters that cannot be resolved over chat or text.

The Benefits of Email Communications in Debt Collection

Email notifications offer numerous advantages over traditional letters in the debt collection process. These advantages include increased efficiency and cost-effectiveness, better targeting and personalized messaging, improved consumer communication, and greater compliance with federal and state regulations.

Email Accessibility

Another significant advantage is email’s accessibility. A single device allows an individual to receive emails, access websites, use mobile apps, text, and place voice calls. Consumers use many channels to communicate with businesses and individuals across the customer lifecycle, and there’s no one-size-fits-all approach to servicing them.

Debtors can be reached regardless of location or time zone as long as they have internet access. This broadens the reach of debt collection efforts and eliminates geographical barriers. 

Increased Efficiency and Cost-Effectiveness

Emails are delivered almost instantly, making them faster and more cost effective than traditional letters — compared to a letter that requires being printed, stamped, mailed and delivered. In addition, the cost of sending an email is 97% lower than a letter!

Better Tracking

By tracking metrics such as open rates, click-through rates and response times, debt collectors can identify areas for improvement and optimize their communication strategies. Asking questions like, “Was the payment successful?” Or, “Did the consumer bail during the conversion process?” These types of metrics provide data-driven insights that can help the team with better decision-making for potential automation (self-serve options) while enhancing overall performance.

Additionally, tracking consent, opt-in and opt-out requests is essential to stay compliant. 

Better Targeting and Personalized Messaging

Unlike traditional communication methods, emails allow for precise targeting based on various criteria, such as demographics, interests, behavior, and previous interactions. This enables debt collectors to send highly relevant and practical messages to specific segments.

Personalization is another crucial aspect of effective email communication. By incorporating the debtor’s name, account information, and specific details about their debt, debt collectors can create a sense of connection and make the message more relevant. This can help build trust and improve the chances of successful debt recovery.

By utilizing personal email addresses, agencies help ensure their communications are delivered to the right party. Emails can be customized with the debtor’s name, account information, and specific details about their debt, making the communication more personalized and engaging.

Emails provide a more efficient way of contacting consumers. This helps consumers stay informed and engaged, ultimately improving collection rates. Check out this case study to see how a TCN customer leveraged the Operator platform to collect more effectively.

Replacing Traditional Debt Collection Letters with Email Communication

Replacing traditional mail can provide immediate cost savings, but it is important to know what collection notices can be replaced specifically. 

The following are some of the collection letters and notifications that can be replaced by email:

• Second Notices
• Third Notices
• Payment Plan Confirmations
• Payment Due Reminders
• Payment Past Due Reminders
• Offers in Compromise
• Payment Receipts
• Post-Dated Payment Deposit Reminders
• Paid in Full Notifications
• Non-Sufficient Funds Notifications

Key Considerations and Best Practices for Email Communications in Debt Collection

Following best practices is critical to ensure your email gets read. The best debt collection agencies use the guidelines to help them achieve their operational goals while emailing a debtor. Here are a few: 

• Use an email template for brand consistency and to save time. Consider doing an A/B test on different templates. 
• Include the required federal disclosures and state-specific rules for collecting a debt.
• Don’t hide your unsubscribe or opt-in preferences, and honor those. Gaining and tracking consent is the best way to build trust. 
• Only use personal email addresses.
• Provide a clear call to action or a path to self-service.
• Give specific debt information and have it readily available.
• Provide payment options and due dates upfront. 
• Include business contact information.

If you are unsure about some of these suggestions you should consider taking a conservative approach and count an email within the Regualtion F framework of the 7 in 7 rule. 

Staying Compliant with Federal and State Regulations

Taking into account the best practices mentioned earlier, every email must comply with the same federal and state regulations as traditional letters, CAN-SPAM, and other electronic communication standards. However, emails provide a more cost-effective and flexible solution for meeting these requirements.

• CAN-SPAM: Sets rules for commercial email messages, including those sent by debt collectors. CAN-SPAM must have Clear Indetification, Opt-out, Subject Line Accuracy, and True Content. 
• Fair Debt Collection Practices Act (FDCPA): Controls debt collection abuse, and unfair or deceptive practices. Following the newest Regulation F will help when communicating with debtors.  
• Consumer Financial Protection Bureau (CFPB): Additional standards for enforcement of debt collection practices, including those related to email. Watch this webinar to learn more about how to align your compliance management system to the CFPB. 
• State Laws: Many states have their own regulations and governing laws surrounding email communications. 

Email has become an indispensable way of communicating for modern collection agencies. By leveraging the efficiency, cost-effectiveness and personalization capabilities, agencies can improve engagement and ultimately increase collection rates. 

Check out TCN’s email capabilities for debt collection to learn more.