How Reg F is an opportunity for businesses to improve customer experience

After years of commentary and discussion, the Consumer Financial Protection Bureau (CFPB) issued a ruling to modernise the Fair Debt Collection Practices Act (FDCPA), originally established in 1977. ‘Regulation F’ went into effect on November 30, 2021, tightening many restrictions already in place and making a litany of updates to how debt collectors and creditors can communicate with consumers regarding overdue accounts. New regulations like these present hurdles for businesses as they work to comply, but Reg F compliance also invites businesses to think outside the box when it comes to debt collection.

What is Regulation F?

The CFPB made these updates (and more, not covered here) to the FDCPA as part of Regulation F:

• Limitations on the number of calls that can be made to consumers
• Green-lighting electronic communication for debt collection
• Giving consumers the right to stop specific types of communication, including the option to opt-out of electronic communication
• Requirements around providing expanded disclosures to consumers at the beginning of collection communications, including third-party disclosures via email or text.

Long story short, communication with consumers about debt collection got a little more nuanced with the introduction of Reg F. Gone (rightfully) are the days of debt collection agencies chasing consumers with dozens of phone calls every week in hopes of getting them to repay an overdue account.

How businesses can leverage Reg F to improve collections

Businesses can use Reg F as a starting point for creating a customer-centric experience. By following these tips, you can modernise your debt collection strategy while ensuring Reg F compliance. As an added bonus, you’ll create a positive feedback loop with your customers, improving loyalty, retention and your bottom line.

Tip 1: Leverage a debt recovery partner with a modern, digital-centric approach

There are big benefits to working with a third-party debt collection agencies, and the benefits multiply when they take a modern approach to debt collection, keeping both your business and customers best interests in mind.

Thoroughly vet any debt collection partner to ensure they’re not only compliant with Regulation F, but that they take it one step further and align with your standards for customer service and experience. Prioritising both of these qualities will:

1. Increase customer satisfaction: N early 80% of Americans list efficiency and convenience as the most important elements of a customer experience. Businesses who utilise a digital-first collections strategy can meet customer expectations for ‘fast and convenient’ throughout the collections process.
2. Decrease risk: By leveraging a partner well-versed in Reg F, you can rest assured knowing that while you’re getting high value, you’re not increasing liability for your business.
3. Improve data insights: A digital-centric approach lends itself to better data collection, benefiting both your customers and business. Use data to personalise every customer experience, and leverage stronger insights into the collections process.

Tip 2: Keep the customer experience at the forefront of your debt collection strategy

There are nearly 80 million millennials in the United State alone, officially taking over as the largest consumer group and packing over a trillion dollars in spending power. Needless to say this is the generation businesses should be most concerned with establishing a line of communication with.

So while Regulation F is a forcing function to ‘hang up the phone,’ it may be in creditors’ best interest to abandon voice calls as a primary mode of communication for even more practical reasons. Namely, getting any attention from millennial consumers.

Technology company BankMyCell recently conducted a survey in an attempt to understand this phenomenon – and the results make a pretty strong case for abandoning outbound phone calls:

• 75% of millennials surveyed avoid phone because it’s time-consuming
• 46% of millennials surveyed are avoiding a verbal confrontation
• 64% of millennials surveyed are avoiding a whiny/needy person

Ironically, this generation is always on their phone, they’re just not using it to make a phone call. Millennials want to communicate efficiently, and are more familiar with the infinite modes of digital communication than any other generation. If you want to not only get in touch with millennial customers, but also ensure that communication experience is a positive one, explore beyond dialler campaigns.

Adapt to how consumers want to be communicated with to maintain a positive customer experience. This means evolving your communication strategy to consumer preferences to take an unsavoury experience like a request to repay an overdue debt and make it a little sweeter.

Tip 3: Leverage intelligent debt collection to maximise recoveries

Intelligent debt collection uses AI and machine learning to debt collection operations. In practice, this gives your customers a personalised collections journey that is tailored to how they want to engage with their debt, while eliminating manual processes.

It puts the power in the consumer’s hands, enabling them to communicate in their own time and on their own terms. Improving the timing of these communications, focussing on personalisation, and diversifying communication channels, businesses can improve debt resolution rates by up to 40%.

How is InDebted handling Reg F?

InDebted has been prepared for Regulation F from the get-go, applying an omnichannel strategy from the start and leveraging a consumer-centric approach.

Additionally, we prepared an in-depth analysis of Reg F and created a Reg F Committee to ensure that all potentially impacted business practices were investigated and enhanced to be in compliance. InDebted continues to audit for compliance to ensure all company policies and procedures are working as designed.