Email has been proven to be an effective way to engage with debtors since before the turn of the century. During the past two decades, other methods of electronic communication have also become popular, most notably SMS text messages and direct/private messaging on social platforms.
The recent finalization of Regulation F opened the door to broader use of these digital communications channels by the collections industry. Given the headwinds currently faced by companies attempting to communicate with debtors via email, and the rise of other forms of digital debt collection post-Reg F, there is some question regarding the future viability of collections emails. This article offers a brief analysis of that question.
The Challenges Facing Collections Emails
The sheer number of emails sent in a given day is staggering: according to recent data daily email volume reached 361 billion in 2023, and is expected to rise to over 392 billion by 2026. This volume of email communication represents a significant challenge to collections professionals and others with legitimate business interests, simply because many consumers are overwhelmed by the number of emails arriving in their inboxes. It is all too easy for one message to be lost in the shuffle, and correspondingly all too plausible for a consumer to claim that a collections email has gone unread and unnoticed.
Other challenges of relying on email include, but are not limited to:
- The risk of emails being diverted from the debtor’s Inbox to their Junk/Spam folder
- The volume of unsolicited spam emails received in a day (estimated by Statista at 8 billion/day in the United States, as of January 2023)
- Outdated or incorrect email addresses
- The prevalence of email scams in general, and collections or debt consolidation scams specifically (in 2023 email was the method of contact for 24 percent of the 5.39 million cases of fraud reported through the FTC’s Consumer Sentinel Network, which represents over 1.29 million cases of fraud)
These ongoing issues have resulted in new attention being given to alternative forms of digital debt collection, including SMS text messaging, direct/private messaging on social platforms, and push notifications to mobile devices (available to first-party creditors, when the debtor is using their app). Text messaging has drawn an especially high level of attention, due largely to SMS messages’ exceptional open rate and response rate.
All of these alternative communications channels can and should hold a place in the collections professional’s arsenal, collectively contributing to a robust omnichannel presence. A strong case can also be made for email continuing to also play a role in that strategy.
The Case For a Continuing Strategy of Email Use
Despite the numerous challenges previously discussed, the collections email is not yet dead. One reason for this is simply its universality: as of 2022, Statista reported that 92 percent of digitally connected Americans used email.
More importantly, email remains a preferred communication channel for many consumers. Collections-specific research conducted by the McKinsey Company found that email was the preferred contact method for a high percentage of debtors, and that contact made through digital means (including email) resulted in higher rates of repayment. Addition research by McKinsey showed that using the debtor’s preferred communications channel, in and of itself, can lead to a >10 percent increase in payment.
Another key point is that the advantages currently enjoyed by other communications channels are due in large part to their relative novelty, and that as they, in turn, become both familiar and over-utilized, their efficacy will also decline. Removing friction from the user experience, and simplifying the process of communicating and making payments, should be a key goal for both first- and third-party collections professionals. Empowering debtors to choose their preferred channel of communication, including email, is an example of how this can be accomplished.
Effective Use of Email in Digital Debt Collection
Making a case for the continued use of collections emails is not difficult, but the challenges discussed previously must be planned for, and mitigated as much as possible. At this point, it may be constructive to briefly discuss possible mitigations, and other strategies underpinning the effective use of email as a collections tool.
Securing Current, Accurate Email Addresses for Debtors
First-party creditors may already have one or more email addresses on file for a given customer; but if they don’t, they must be secured through other means, such as Spokeo for Business.
A search using the debtor’s social security number, name, physical address, phone number, or last known email will typically turn up multiple current and former email addresses associated with the debtor, and indicate which is likely to be the current or most-used email. For businesses with the necessary IT resources, it’s also possible to perform these searches at scale through the use of Spokeo’s Application Programming Interface (API).
Establishing the Debtor’s Preference and Consent
However initial contact is made with the debtor, it provides an opportunity to establish which communications channel the debtor prefers, and to solicit their explicit consent to future contact through that channel. Should the debtor express a preference for the email channel, it’s best to verify which email address is the best one to use for the purpose.
For privacy reasons, work email accounts should be avoided; many employers monitor their in-house email accounts. It’s prudent to include a third-party disclosure clause, disclaiming responsibility should the debtor permit anyone else access to their inbox. This is especially crucial in the case of medical debt, which may fall afoul of HIPAA rules.
Proactively Establishing Trust In the Inbox
When a debtor chooses to receive communications by email, it’s good practice to send an immediate email in order to verify that the email address you have is accurate and that your communications will be received. This is also an opportunity to establish trust with the debtor.
Consider the example of companies often impersonated in fraudulent emails, such as Paypal, Apple, and Amazon. Each of those companies maintains a guide on its respective website, explaining how to differentiate between their legitimate communications and lookalikes sent by criminals. A similar explanation incorporated into your own first email communication can arm the debtor against attempted fraud, and give them confidence that your emails are legitimate. A visual infographic (“This is how you can recognize a legitimate email from us”) can be helpful.
Similarly, you may wish to avoid the possibility of misdirection to the debtor’s Spam or Junk folder by including an explanation of how to whitelist your domain or collections email address in the major email clients, such as Microsoft’s Outlook or Google’s Gmail.
Turn on Email Read Receipts, If Available
Email providers, and third-party email-handling services, are often able to provide “read receipts.” These simply verify that a message has been received and opened, and provide a measure of confidence that the debtor has been contacted.
Sending a Secondary Message by Another Channel
If read receipts are not an available option, it can be difficult to know whether your emails have been received correctly. If the initial email is sent while the debtor is still interacting with a collections agent, on the telephone, or through interactive chat, confirmation can be gained during that conversation.
Otherwise, sending a secondary message through voicemail, text or another medium can provide a fail-safe in this situation. The message can simply say that an email was sent to the debtor on a specific date and time, and that if it is not in their inbox they should look for it in their Spam or Junk Folder.
Avoiding Words and Phrases Used by Scammers
Email providers are necessarily cagey about the algorithms they use to detect scam and spam emails, because in this instance transparency would simply empower the criminals and spammers. Many third-party providers of email marketing services have learned through trial and error which words and phrases are likely to trigger spam filters, and publish lists of such phrases on their blogs (two examples may be found here and here). This hard-won expertise in circumventing spam filters is one of the selling points of such services, and utilizing one to manage your collections emails may make sense in some cases.
Establishing Clear Guidance and Standards for Email Communications
Consistent, rules-based messaging is important in collections. Without consistency, it is difficult or even impossible to monitor the success rate of such communications or to establish effective phrasing through A/B testing. Within a given collections team’s workflow it may make sense to draft a number of standard emails or to establish, document, and publish internally a coherent set of templates, rules, and approved language that can be utilized at the agent level to construct appropriate email messages.
Firms with the necessary IT resources may also utilize algorithms to monitor outgoing emails for incorrect or inappropriate language and to flag those for review before sending.
Compliance and Best Practices in Collections Emails
Much of what we’ve discussed in this section, including establishing consent, touching on third-party disclosure, and maintaining firm control over the content of any emails, overlaps with compliance and best practices. Other representative requirements and best practices include:
- Ensuring that the firm’s full name shows in the From field of any email communications.
- Constructing Subject lines that include the creditor’s name and the consumer’s account number (truncated for privacy reasons), as well as the reason for the email.
- Meeting the E-Sign Act’s disclosure requirements, where applicable.
- Offering an opt-out or “unsubscribe” option in every email, should the debtors wish to revise their contact preference or withdraw their consent.
Email Retains its Value in Collections
Although other digital communications channels hold significant promise for use in the collections industry, it is not yet time to dismiss email entirely. It remains a powerful tool in its own right when used appropriately, and because of its universality, it has an important role to play in any omnichannel collections strategy.
The ability to uncover current, valid email addresses is key to the continued use of collections emails. Spoke for Business provides a premium tool for that purpose, harnessing billions of data points from both open-source and regulated data sources, and utilizing advanced analytics to make connections between debtors and their email accounts.
For more information on how Spokeo for Business can accelerate your skip tracing and contact efforts and make them more cost-effective, or to arrange a demo or a free trial of the product, reach out to our team through our Skip Tracing/Collections page.
Sources
Statista: Number of Sent and Received Emails per Day Worldwide from 2017 to 2026
Statista: Daily Number of Spam Emails Sent Worldwide as of January 2023
US Federal Trade Commission: Consumer Sentinel Network Data Book 2023
Statista: Email Usage in the United States: Statistics and Facts
Tech Report: 37 Fascinating SMS Marketing Statistics and Trends for 2023
McKinsey Company: The Consumer Mandate to Digitize Collections Strategies
McKinsey Company: Holistic Customer Assistance Through Digital-First Collections
Paypal Help Center: How do I Spot a Fake, Fraudulent, or Phishing PayPal Email or Website?
Apple Support: Identify Legitimate Emails From the App Store or iTunes Store
Amazon Help: Identifying a Scam
Microsoft Support: Block and Unblock Senders in Outlook
Google Support: Allowlists, Denylists, and Approved Senders
Active Campaign: 188 Spam Words to Avoid: How to Stay Out of Email Spam Folders
EngageBay: All the Email Spam Words You Should Avoid: A 2024 List
Consumer Financial Protection Bureau: § 1006.42 Sending Required Disclosures