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Omnichannel Collections: A Strategy to Stay Compliant with Reg F

Omnichannel Collections: A Strategy to Stay Compliant with Reg F

“To improve is to change; to be perfect is to change often.”

These famous words by Winston Churchill sum up precisely what is happening in the debt collection landscape today. For years, the Accounts Receivable Management (ARM) industry has been one of the most rigid industries, judicious at making the shift toward advanced technology solutions. Its legacy technology systems made it difficult for consumers to resolve their financial challenges on their terms in a considerate, transparent, and effective manner. Their concerns about modernizing outdated technology systems created challenges in gathering, sharing, and maintaining consumers’ data over time, introducing risks and inefficiencies for collection agents while delivering a poor customer experience. These systems were designed and developed based on the needs of yesterday and needed to improve for a long.

Fortunately, the accounts and receivables industry has picked up the pace in the past couple of years, witnessing plenty of regulatory changes. Organizations in the accounts and receivables space are bringing changes to the decades-old laws to accommodate better modern customers’ needs and collection agencies’ preferences.  One such reform is the long overdue modifications to the Fair Debt Collection Practices Act (known as “Reg F”), which came into effect in November 2021.

Regulation F (Reg F) Overview

Reg F is a new version of the Fair Debt Collection Practices Act enforced by the Bureau of Consumer Financial Protection (CFPB). Regulation F aims to protect consumers from unfair debt collection practices such as harassment or abuse and false or misleading representations. It significantly impacts collection agencies, debt buyers, collection law firms, and loan servicers in the ARM landscape.

Understanding Reg F a Bit More

The new act has triggered financial institutions to rethink how they engage with customers, including how account representatives identify themselves, the methods they use to contact consumers, and the types of information they collect from consumers. It strictly applies to the mode of communication used by the account representatives, including phone calls, and extends to newer communication channels such as SMS, WhatsApp, voice mails, and emails. Overall, this act regulates the strenuous relationship between account representatives and consumers, improving the debt collection process’s efficiency and the latter’s experience.

As stated above, Reg F is a revolutionary approach that has brought heavy communication restrictions to protect consumers from abusive practices. Among these restrictions, the use of phone calls by account representatives has been impacted the most by the introduction of the 7-in-7 rule. The rule stipulates that account representatives are prohibited from making more than 7 calls within 7 days’ time. In response to the newly imposed restrictions, agencies have begun optimizing their approach to reach their target audience via distinct channels according to their customer’s preferences. More than one in three (37%) collections firms are now using text/SMS messaging. They have started providing regulatory clarifications around emails and text messages, including clarification on their right or the option to include clear opt-out opportunities in outbound communications. Additionally, they are putting an end to the use of workplace numbers for connecting with customers. By utilizing all communication channels and shifting to an omnichannel approach, agencies can avoid potential regulatory issues and prevent falling into trouble with Reg F.

Omnichannel Debt Collection Strategy Gives an Advantage

Over the years, many collection agencies have adopted omnichannel debt collection strategies to keep up with the changing market scenarios and customer behavior. Collections systems with omnichannel capabilities enable account representatives to leverage a range of communication channels to connect with their consumers without any technical limitations while empowering their consumers to choose the communication channel of their preference. Consumers can choose how and when they want to be contacted and how they want to repay their debt without being overwhelmed. Therefore, omnichannel collections are a win-win for both parties.

Benefits of an Omnichannel Strategy

An omnichannel strategy is an approach to debt collection that recognizes that consumers want to interact with the collection agencies through their preferred communication channels at a time of their preference. An omnichannel strategy seeks to provide a consistent, seamless experience for the consumer, regardless of how they interact with the collection agency. There are many benefits to implementing an omnichannel system for organizations in the accounts and receivables space; some of them are:

  • Enhanced Customer Experience: An omnichannel collection system enables firms to connect with consumers via their preferred channels. It allows consumers to create arrangements and make payments through their preferred medium.
  • Better Customer Insights: An omnichannel strategy enables firms to collect and analyze data across multiple channels. This data enables collectors to understand the consumers and their preferences better. Additional consumer information allows firms to verify identities and accurately flag potential fraud threats.
  • Reduced Operational Costs: When account representatives know when to contact and which communication to utilize for contacting a consumer, they save costs associated with contacting multiple times through various communication channels.
  • Increased Collections: An omnichannel collection system enables firms to engage with consumers in intent-driven decision-making moments across multiple touchpoints and presents preferred payment modes to them. In comparison to organizations with weak omnichannel engagement, others with an established omnichannel approach can grow revenue by 9.5% annually. With an omnichannel strategy, agencies gain 10% of potential revenue, equivalent to their annual growth targets, and experience a 7.5% decrease in contract costs.
  • Future-proof Compliance: Frequently following up with customers over the phone or by email may lead your agency to operate outside the latest CFPB rules and attract the attention of a customer’s attorney. Self-service platforms aligned with the latest rules and regulations of the ARM industry can help accounts and receivables organizations to communicate with consumers only after their consent and know what constitutes customer privacy breaches.

Implementing an omnichannel strategy is challenging, but the benefits far outweigh the challenges. Organizations that implement an omnichannel strategy are better positioned to meet the needs of their customers and compete in today’s marketplace.

Introducing Cogent – A Modern Omnichannel Collection Solution

Cogent is robust collections and case management software typically used by collection agencies looking for legal workflow and automation for accounts receivables. It enables organizations to leverage a safe, secure, reliable system that provides an efficient omnichannel experience for collection agencies and firms with its extended capabilities.

Distinctive Omnichannel Collection Features in Cogent

  • Omnichannel Availability: Cogent allows firms and agencies to communicate with consumers via different channels such as Telephony, IVR (Interactive Voice Response), Ringless Voice Mail, Email, Text/SMS, social media, and more. It enables the account representatives to transition between different communication channels and keeps the host system updated.
  • Integrations: Integrates with popular third-party vendors like click-to-dial providers, call recording software, letter generation, accounting, payment solutions, and more. Built on a scalable and open architecture, Cogent can be integrated with various communication channels.
  • Template Management: Enables users to choose the appropriate subject, body, and attachment from several available email message templates in Cogent. Users can create customized templates for email bodies. Moreover, details of every outbound email (email message, recipient’s email address, date & time sent, etc.) will be available in the claim comments.
  • Batch Processing: Empowers firms and agencies to send communication in batches or individually. Leveraging the batch processing feature, users can send bulk emails or SMS based on rules defined in the workflow.
  • Opt-in/Opt-out: Enables firms and agencies to choose the method for outbound communications. There is an option to opt in or opt out of omnichannel communications for firms, agencies, clients, and consumers. Organizations can also choose the most appropriate communication mediums from an extensive list. Users can also decide whether a single or multiple communication will suffice for the consumers.
  • Rules Engine: Affords users the ability to maintain or adjust customized workflows to ensure compliance with the latest state and federal regulations. Omnichannel rules are set at each communication stage to help account representatives comply with existing laws within the workflow and while scheduling omnichannel tasks. 
  • Consumer Service Portal: Delivers a self-service option for consumers with the consumer service portal. Consumers can utilize this portal to track their debt history, raise queries and pay accounts.
  • Analytics & Reporting: Delivers data from multiple channels in comprehensive reports enabling firms and agencies to strategize for omnichannel communications better. Allows account representatives to engage with consumers through a channel and at a time of convenience, thereby reducing the need for frequent follow-ups and increasing collections.

AgreeYa updates the product periodically to incorporate the latest technology trends in the ARM industry. If you are curious about process optimization, better compliance management, omnichannel collections, and increasing recovery rates, then connect with us.

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