The past few years have been difficult for many industries, and third-party collections have been no exception. The macroeconomic headwinds resulting from inflation, job instability, and other factors, intensified within the industry by the impact of Regulation F and changes to medical debt recovery, have created a challenging environment.
Over this time some noteworthy trends have begun to crystallize. Here are five that Spokeo’s industry experts believe will impact debt collection strategy, third-party collections, and the collections industry as a whole throughout 2025.
1. Increased Use of AI and Automation in Third-Party Collections
Artificial intelligence has existed for decades in various forms, but recent developments in machine learning and large language models (LLMs) such as ChatGPT and Claude have sparked a sharp uptick in the technology’s capabilities, and its utility for an expanding range of use cases.
One of those use cases is collections. Some AI tools have already been available to the industry for several years, typically in data analytics. Newer tools, fueled by the recent increase in the models’ power and flexibility, might:
- Empower automated messaging and chatbots, simultaneously reducing labor costs while offering efficient, personalized service to debtors.
- Lighten the burden on staffing, lowering both labor costs and employee burnout.
If implemented properly, the end result of leveraging AI tools should be increased operational efficiency, higher recovery rates, and less friction in debtor/collector interactions.
How Spokeo Can Assist
AI tools based on machine learning are only as good as the data they’re fueled with. Spokeo for Business’s deep database of consumer information, consisting of both regulated and non-regulated (open-source) data, could be used to provide AI models with accurate, up-to-date information.
Better input (such as adequate prompts and data pulled from a source like Spokeo), in this instance, creates better outcomes. AI tools drawing on Spokeo data can become more effective at predicting how to best contact a debtor, personalizing communications strategies, and automating routine tasks such as follow-up.
2. Shift Toward Consumer-Centric Collection Practices
The collections industry’s interactions with debtors have long been largely adversarial in practice, if not necessarily by intention. Forward-looking collections professionals have begun to embrace a paradigm shift toward consumer-centric collections practices, centered on less aggressive messaging, better communication, and more flexible payment options.
The benefits are intuitive for first-party creditors, who have a customer relationship to preserve, but they extend to third-party collections as well. Strategies oriented around the customer experience have been proven in real-world settings to reduce friction from debtor interactions, improve engagement, and drive recoveries. This also places collections professionals in better alignment with both consumer advocacy campaigns and regulatory bodies such as the CFPB, which have pushed in recent years for more ethical collections practices.
How Spokeo Can Assist
Spokeo’s rich dataset can help create and refine personalized and consumer-centric collections strategies, with deep insights into the debtors’ addresses or changes in employment status that directly impact their contactability. Spokeo’s billions of data points also include debtors’ phone numbers, physical and email addresses, and social platforms, ensuring that collectors have a full suite of options for establishing and maintaining respectful, non-intrusive contact through the debtors’ preferred communications channels.
3. Changing Regulatory Oversight and Compliance Requirements
For the collections industry specifically, Regulation F and recent changes to medical debt collection rules have had a significant impact. They are representative examples of a worldwide trend toward greater regulatory focus on privacy, data-gathering, and their uses in the consumer marketplace. This increased oversight has enjoyed bipartisan support domestically, despite differences on where and how oversight should be applied.
It is reasonable (and prudent) to expect that highly publicized data breaches and ransomware attacks, the impact of consumer-centric litigation, and a cross-party desire to be perceived as “on your side” by voters, will ensure increased oversight despite the broadly anti-regulation stance of the current administration. That being said, the current administration’s move to dismantle the CFPB does leave the regulatory status quo for the collections industry in limbo, and opens the door for greater state- and local-level regulation.
How Spokeo Can Assist
Spokeo for Business can facilitate compliance in many ways. It begins with the product’s high-quality data, which increases the likelihood of right-person contact and provides more and better avenues for communication (thereby reducing the risk of inadvertently breaching the rules around contact frequency and methods).
Spokeo for Business also provides simple, easy-to-use administrative tools to ensure transparency for audit purposes or to meet regulatory inquiries. This helps minimize the effort required to demonstrate compliance when required to do so.
4. Expansion of Digital Payment Options
The collections industry exists for the sole purpose of encouraging, receiving, and processing payments from debtors. Accordingly, any factor adding friction to the payment process should be targeted for improvement or reconsideration. Limiting the payment methods available to debtors is an obvious example.
Retailers and fintech companies have created the expectation that consumers should be able to pay in any way that’s convenient for them: mobile payment apps, digital wallets, and cryptocurrency are all options collections professionals should be exploring. Every additional payment option will appeal to a new tranche of debtors in your portfolio, especially among the younger demographics, making it easier for them to meet their obligations.
Partnering with a third-party “buy now, pay later” (BNPL) provider as a debt collection strategy is an intriguing alternative to conventional payment plans, especially for small collections agencies. The BNPL option has widespread consumer acceptance, and it can be simpler and more cost-effective than expending your own resources on the management of payment plans.
How Spokeo Can Assist
Spokeo’s powerful people-search tools can help assess which debtors may be most receptive to alternative contact methods, which may signal an openness to alternative payment methods. Further, once those debtors have been identified, up-to-date contact information from Spokeo searches can be used to match those debtors to the most appropriate channel for communications.
5. Focus on Data Security and Cyber Risk Management
Cyberattacks focusing on financial data are frequent and damaging to both consumers and the companies holding their data. The nature of third-party collections places a great deal of sensitive data in agencies’ hands, and regulations, including the GLBA, GDPR, CCPA, and many state laws, all lay out a firm mandate for the industry to protect that data assiduously.
Prioritizing data security will certainly be a growing concern for the collections industry in 2025, potentially including measures such as:
- More frequent security audits
- Encrypting debtor data
- The use of multi-factor authorization and/or zero-trust principles to govern access to sensitive data
- Adopting blockchain technology to provide verifiable data integrity, and make any alterations in the data traceable.
How Spokeo Can Assist
Spokeo for Business was constructed from the ground up to provide a secure, compliant platform for data, lightening that burden on the collections companies we partner with. Our data is up to date and corroborated by multiple sources, helping reduce the risk of fraud and impersonation. High-quality data also helps mitigate the likelihood of misidentification resulting in wrong-person contacts and potential complaints for harassment. The product also offers secure data integration through its powerful API, ensuring that sensitive data is protected during the transfer process from our servers to yours.
Future-Proof Your Collections Strategy
Whether or not your priorities for the coming year align with the trends we’ve identified, or rival trends from other sources, one thing remains certain: for agencies of all sizes, success and growth will revolve around the incorporation of powerful, modern tools like Spokeo for Business into your software stack.
To learn more about how Spokeo for Business can improve your outcomes and reduce costs, to arrange a demo, or to set up a hands-on trial of the product, reach out to our team through the contact information on our Skip Tracing and Collections page.
Sources
Leeway Hertz: AI in Debt Collection: Use Cases, Benefits, Development and Future Trends
McKinsey & Company: Holistic Customer Assistance Through Digital-First Collections
Consumer Financial Protection Bureau: Fair Debt Collection Practices Act: CFPB Annual Report 2024
GDPR.eu: What is GDPR, the EU’s New Data Protection Law?
Office of the Attorney General of California: California Consumer Privacy Act: Fact Sheet