From Stone Age to Drone Age: Debt Collection Goes High-Tech

By Richard Read Personal Finance NerdWallet.com

Zoey, a collections avatar by BeGuided Inc.

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Behind on bills? Brace yourself. Debt collectors are adopting high-tech tactics to boost payments. Watch your smartphone for avatars that coo and voicemails that arrive without a sound.

Collections agencies are evolving from the financial stone age of dunning letters and manually dialed phone calls into an era more like drone combat. New collections techniques save labor and skirt rules of engagement.

The inventive approaches surprise debtors and rile consumer advocates. But company managers contend their innovations actually benefit consumers as the industry performs its unpopular but necessary role.

Prepare for these new gambits:

Ringless voicemail drops

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Debt collectors have long chafed at regulations that restrict how often they can call consumers, and require debtors’ consent to be called. New software lets collectors sidestep those rules, inserting voicemails into phones by the thousands without a ring.

Technically the stealth communiques aren’t calls at all, but messages sent to phone companies’ servers that show up as voicemails.

Companies such as Stratics Networks maintain that because no phone calls are made, regulations prohibiting auto-dialed collections calls don’t apply. Attorney Billy Howard, of The Consumer Protection Firm in Tampa, Florida, disagrees.

“They’re trying to torture the language of the Telephone Consumer Protection Act,” says Howard, referring to the law that forbids call-center reps from harassing consumers. He doesn’t buy the argument that “all of a sudden if it doesn’t ring, it’s not a call.”

But Paul Gies, senior sales vice president of voicemail technology company VoApps Inc., says consumers like his firm’s “DirectDrops” ringless messages because they can respond on their own timetables instead of feeling ambushed. In fact, he says, debt collectors say these unannounced voicemails work almost too well.

“Clients tell us that they overwhelm their call centers with inbound volume,” Gies says. “So we have what we call pacing features” for voicemail delivery.

Avatars

Animated cartoon characters like Zoey, a virtual collections agent who shows up in borrowers’ email inboxes, tirelessly smooth-talk debtors into payments. A borrower sees Zoey’s photo in an email and clicks a link to a site where she talks them through payment. Borrowers dealing with “warm, friendly” avatars are three times more likely to pay than debtors visiting conventional sites, says Tom Gillespie Jr., chief executive of BeGuided Inc.

Collections managers design personalities of avatars, who speak multiple languages and weigh debtors’ credit scores when negotiating payments. Avatars save consumers the embarrassment of being hounded by real people, Gillespie says.

Gillespie also runs a collections company, Access Receivables Management Inc., whose slogan, “nice people collect more,” represents a departure from threats and insults that have hurt the industry’s reputation.

“In the last year we’ve sent out millions of emails” bearing avatars, Gillespie says. “We’ve had zero consumer pushback.”

Speech analytics

Cussing out a debt collector? Advanced language-recognition programs not only track keywords during phone conversations but identify emotions of debtors and collection agents. Prompts generated by CallMiner Inc. software help steer conversations back on track.

Supervisors using the speech-analytics company’s system see color-coded boxes on call-center computer monitors. Small green boxes represent routine conversations. During those calls, agents are remembering, for example, to recite mandatory “mini-Miranda” statements that inform consumers of their rights.

But a box turns red and expands when a call contains expletives or long silences as a hapless agent fumbles for information. “A supervisor can consider barging in and taking over the call, or whispering into the agent’s side of the call,” says Scott Kendrick, CallMiner marketing vice president.

CallMiner’s Eureka program can tell whether an agent expresses appropriate empathy when a debtor says he’s bereaved. The system can guide negotiations, identify phrases that produce payments and score results to rank top collectors.

FidoTrack LLC software helps guide agents’ calls.

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Gamification

They don’t know it, but some debtors are pawns in video games designed to motivate call-center reps. Agents earn prizes for fastest, highest recoveries.

Former call-center managers in Vermont run FidoTrack LLC, a company that uses video games and prizes to motivate collections agents in a business notorious for apathy and absenteeism.

“You figure a lot of people who are actually collecting are maybe on the other end of the phone in their personal life,” says Brett Brosseau, FidoTrack president and founder. “It sucks to ask people for money.”

FidoTrack aims to make collecting fun, running competitions that challenge agents to duels and centerwide competitions as they race to recover money while complying with regulations. Prizes can be choice call-center parking places, team pizza parties, televisions or dinners with bosses.

Debtors don’t get to play. But Brosseau says collection agencies can boost revenues by 19%, increasing productivity while reducing turnover and consumer complaints. Consumers benefit, he says, as calls shorten and agents become more responsive.

Skip tracing, spoofing and scrubbing

Debtors are losing games of hide and seek. In a practice called skip tracing, collection agencies mine databases to find borrowers who’ve skipped out on debts.

Some collectors track debtors on Facebook and other social media sites. A Texas agency is linking Social Security numbers to social media accounts, raising privacy concerns.

In a tactic known as spoofing, some agencies insert local area codes in caller-ID displays, baiting the person being called to answer. The Consumer Financial Protection Bureau, a federal watchdog agency, proposes to ban the practice.

Consumers who feel unfairly treated can complain to the CFPB or sue. In that instance as well, debt collectors have an advanced tactic, called “scrubbing.”

Legal sleuths at WebRecon LLC scour lists of borrowers, removing litigious debtors known in the trade as “banana peels.” Amid the high-tech arms race, collectors still step warily to avoid conventional hazards.

Richard Read is a reporter at NerdWallet, a personal finance website. Email: rread@nerdwallet.com. Twitter: @RichReadReports.