Text messaging has exploded to where it is now the preferred method of communication for numerous Americans. Incorporating it with a bank collection and recovery software seems like a natural fit. However staying in compliance could be complicated because customer protection legislation does not specifically account for texting.
It was just a matter of time for debt collectors to start utilizing texting to communicate with debtors better. SMS is both less expensive and more effective.
According to Juniper Research, the mobile device owner reads 97% of text messages and 90% of those are looked in the first 4-6 minutes of delivery.
Email can be inexpensive and response rates are usually less than one percent. Human phone are successful but very expensive. “Real” call center type calls are losing their usefulness as customers now screen calls more and more. “Robo-calls” are less expensive than human calls but they cost more than texts. They are also unproductive and leave a negative impact on customer satisfaction as well, according to studies.
Text messaging works as payment reminder because it is immediate and reaches customers directly in a non-intrusive manner.
Moreover, with our robust system, your team can reach overdue customers with just a quick text or automated SMS message.
Text Messages Must Follow the Rules
Compliance requires understanding regulations that do not specially mention texts. Nevertheless, courts maintain that any bad debt endeavor carried out through text messaging must abide by the identical regulations that oversee voice phone calls.
There have been numerous lawsuits filed against a variety of debt gathering agencies regarding text messaging to communicate with debtors. Many of the companies sued over their use of text messaging violated some of the principles of the Fair Debt Collection Practices Act. This included things like failing to identify themselves as debt collectors, misrepresenting themselves, and threatening debtors.
At the Federal Trade Commission’s request, federal courts in New York and Georgia temporarily halted three debt operations that allegedly violated federal law by threatening and deceiving consumers via text messages, emails, and phone calls. “Legitimate debt collectors know the rules,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection said. “They can’t harass or lie to you, whether they send a text, email, or call you.”
Before considering utilizing text messaging, keep in mind the collections department needs to follow the same regulations followed when making voice calls. Do not send text messages before 8 a.m. or after 9 p.m. Also, make sure agents properly identify themselves and never misrepresent themselves.
Using advanced bank loan recovery software helps financial institutions provide improved rules observance, resource efficiency, and superior reporting. CARM-Pro helps banks reconcile debt successfully, and retain control of costs and accountholders.
Advantages of Using SMS in Financial Services
There is huge potential for reaching out to debtors using text. About 15% of U.S. households have at least one debt in collections, with the average amount being $1,409, according to the Federal Reserve Bank of New York. More than 80% of American adults text, making it the most common cell phone activity, according to Pew Research.
Just as important, using text messaging as a collection device with debtors seems to work. An article posted on “Inside ARM” cited that text-messaging efforts improved results by 470% in a case study done by a U.S. bank.
Utilizing SMS messages for payment reminders, debt gathering, and account updates, can improve on-time payment rates with well-timed payment reminders, personalized messages, and text-to-pay services.
In addition to providing the right technology, IBS offers clients with ongoing and dependable training for your staffs about new techniques and technology. Our Online Self-Guided User Training Modules provides interactive training at no additional cost to support IBS clients.