CNNMoney published the attention-grabbing “Debt collection horror stories.” While these stories are the extreme and not the norm, it’s nevertheless clear that past C&R strategies may no longer work.
Brute force and hard negotiation skills are outdated, and your institution’s image is at risk. Increasingly, customers use social networks to air complaints when dissatisfied or feeling harassed by collectors. Word spreads, and the shared experiences and opinions exert growing influence on others.
Getting collections behavior and communications right is now more important than ever before! Fortunately, social media also points the way to better collections, by demonstrating the power of relationships. The lesson? The best tool in collections is the relationship. Banks that cultivate relationships with customers when they aren’t delinquent are in a better position to collect if they become delinquent.
Source: FICO Bankinganalyticsblog
BIIA Comment: There is another good reason for the industry to change its image and operational strategies. The Consumer Financial Protection Bureau is (CFPB) increasingly focusing on the business practices of the collection industry. Unless the industry reforms the CFPB may do it for them through fines and tighter regulations.