How Algorithms can Affect Consumer Debt Collection
The Fair Debt Collection Practices Act (FDCPA) protects consumers against unfair debt collection practices, as well as harassment by debt collectors. However, consumers regularly experience contact from debt collection companies that appears to be in violation of the federal law. According to a recent article in Wired Magazine, “One in four consumers contacted by debt collectors feels threatened, and most consumers say the calls persist even after requests to stop.” Indeed, many borrowers describe these practices as “a living nightmare.” Is there a better method for debt collection that does not run the risk of harming consumers or violating their rights under the FDCPA?
The article discusses a new debt collection startup that aims to use algorithms and technology to revolutionize the debt collection industry, and we want to look closely at its methods and benefits.
Using Technology to Change the Face of Consumer Debt Collection
The new startup is TrueAccord, and it begins from the premise that persistence of unfair debt collection practices should be treated as “a software problem.” In other words, technology may be able to help ease the burden of consumers’ experiences with debt collection companies while still allowing debt collectors to perform the tasks associated with the job. Ohad Samet, the cofounder and CEO of TrueAccord, describes the startup’s premise like this: “We believe that we can use technology to radically change the user experience and really help people with their day-to-day finances.”
Samet goes on to explain how TrueAccord uses algorithms to get in touch with consumers who owe debts “through email, text, and the occasional Facebook ad, nudging them to check their inbox for an email from TrueAccord.” This method would replace the “robocalls that go unanswered, letters lost in a pile of mail, and pushy collection agents who work on commission.” Through TrueAccord, debtors would also be able to create payment plans for debts online, as well as to change the terms of repayment plans or to cancel payments if necessary.
Privacy Concerns and the Pros and Cons of Technological Debt Collection
Could this kind of technology actually work without becoming predatory? Samet explains that TrueAccord is not obtaining information about consumers through unscrupulous methods and routes. Instead, it relies on “machine learning to analyze data collected from behavior on its website and other information shared voluntarily.” Through this kind of data analysis, TrueAccord is able to determine how much debt a consumer owes, to whom the consumer owes the debt, and whether the consumer is behind on payments.
In addition, TrueAccord is designed to “learn” about the best method for contacting consumers based on each consumer’s personal preference. For example, by analyzing data, Samet and the other cofounders of the startup believe that TrueAccord will be able to determine whether a consumer prefers to have contact with a debt collector via email, text, or phone, and even how often the consumer prefers to receive such contact. Moreover, TrueAccord is designed so that it can predict a consumer’s preferred “tone of voice, such as empathetic, friendly, or inspirational, but never aggressive” when being contacted by a debt collection company.
Learn More from an Oak Park Consumer Protection Lawyer
While it is not yet clear whether startups like TrueAccord will be able to relieve consumers from repeated violations of the FDCPA while still urging those consumers to repay debts, the startup does have aims that could change the way debt collection works. In the meantime, if you are struggling with debt, you should speak with an Oak Park consumer protection attorney about the options available to you. Contact the Emerson Law Firm today to learn more about how we can help.
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