Why Switch from Initial Demand Letters to Electronic Validation Notices? Compliance, Cost, and Consumer Preferences
For businesses and law firms initiating outreach to consumers with past-due accounts, the Initial Demand Letter (IDL) or validation notice serves as one of the first steps towards reclaiming owed funds compliantly. Just as the name suggests, IDLs have traditionally been mailed out to recipients through physical letters—but does costly “snail mail” fit consumer preferences in today’s digital world?
And perhaps an even better question for businesses: can this required validation notice instead be sent via email and still be fully compliant? Yes!
Introducing Retain’s Electronic Validation Notice (EVN), which enables organizations and law firms to spend less by sending this first communication digitally, automating the delivery process, and engaging past-due customers more efficiently at scale.
But making the digital switch isn’t as simple as copying an IDL into an email, especially given compliance considerations for delivery and content.
Let’s look at the costly challenges of traditional paper letters, concerns around compliance, and impact consumer communication preferences can have on your collection success.
The Fair Debt Collection Practices Act (FDCPA) mandates that certain information must be provided to the customer about their debt—known as validation information—and must be the first communication to the consumer or within five days of the first communication, among other requirements. The Consumer Financial Protection Bureau (CFPB) provides organizations a template for these initial communications through Regulation F’s Model Validation Notice (MVN), granting a Safe Harbor from one of the biggest litigation drivers.
As we outlined above, IDLs were originally sent via mail but sending letters has become significantly more expensive with the cost of a single paper letter often exceeding 75 cents, depending on the number of pages per letter and volume.
And if you take into consideration that contacting first through a customer’s preferred channel can lead to a more than 10% increase in payments and 59.5% of consumers prefer email as their first choice for communication—snail mail isn’t just expensive thanks to the price of paper and stamps, but it can also negatively impact repayment rates from late-payers who prefer digital contact.
And perhaps an even better question for businesses: can this required validation notice instead be sent via email and still be fully compliant? Yes!
Introducing Retain’s Electronic Validation Notice (EVN), which enables organizations and law firms to spend less by sending this first communication digitally, automating the delivery process, and engaging past-due customers more efficiently at scale.
But making the digital switch isn’t as simple as copying an IDL into an email, especially given compliance considerations for delivery and content.
Let’s look at the costly challenges of traditional paper letters, concerns around compliance, and impact consumer communication preferences can have on your collection success.
An Unavoidable Compliance Requirement, But an Avoidable Cost
The Fair Debt Collection Practices Act (FDCPA) mandates that certain information must be provided to the customer about their debt—known as validation information—and must be the first communication to the consumer or within five days of the first communication, among other requirements. The Consumer Financial Protection Bureau (CFPB) provides organizations a template for these initial communications through Regulation F’s Model Validation Notice (MVN), granting a Safe Harbor from one of the biggest litigation drivers.
As we outlined above, IDLs were originally sent via mail but sending letters has become significantly more expensive with the cost of a single paper letter often exceeding 75 cents, depending on the number of pages per letter and volume.
And if you take into consideration that contacting first through a customer’s preferred channel can lead to a more than 10% increase in payments and 59.5% of consumers prefer email as their first choice for communication—snail mail isn’t just expensive thanks to the price of paper and stamps, but it can also negatively impact repayment rates from late-payers who prefer digital contact.
- Cost Efficiency: By leveraging email and digital communications, businesses can significantly reduce overheads associated with paper-based correspondence.
- Digital Paper Trail: EVNs create a traceable digital footprint to enhance transparency and compliance with regulatory standards.
- Ease of Management: Managing electronic communications is inherently simpler and more streamlined compared to their physical counterparts through automated systems.
- Time and Resource Savings: By transitioning to EVNs, full-time employees (FTEs) and outsourced partners can redirect their efforts towards other business goals, optimizing operational efficiency.
Switching from letters to digital will help radically reduce paper and postage costs, but as we mentioned earlier, it’s not as straightforward as simply copying the sample validation notice in an email. There are design, formatting, and user experience considerations (such as viewing from a phone vs a computer); beyond basic email delivery rates, there are deliverability considerations (inboxing rates, soft and hard bounces); plus designing digital policies and procedures to ensure your program meets not only Regulation F obligations but federal, state, and local laws.
Fortunately, there’s a solution that checks all of these boxes and more.
Fortunately, there’s a solution that checks all of these boxes and more.
Delivering Electronic Validation Notices with Retain
With so many compliance nuances and technical infrastructure required to make the switch from paper letters to electronic mail, attempting to send IDLs via email can be more of an undertaking for in-house teams to execute efficiently and effectively.
Enter Retain by TrueML Products—whether you’re a lender, law firm, or any business with delinquent accounts, Retain is your ready-to-use solution for reaching and retaining customers while boosting repayment. Retain is a scalable, client-branded digital delivery tool to help you manage and optimize customer engagement, automate your digital communications, and keep your headcount low.
With Retain, businesses can seamlessly transition from traditional paper-based IDLs to sending compliant notices via email. Retain empowers businesses and enhances customer engagement by:
Enter Retain by TrueML Products—whether you’re a lender, law firm, or any business with delinquent accounts, Retain is your ready-to-use solution for reaching and retaining customers while boosting repayment. Retain is a scalable, client-branded digital delivery tool to help you manage and optimize customer engagement, automate your digital communications, and keep your headcount low.
With Retain, businesses can seamlessly transition from traditional paper-based IDLs to sending compliant notices via email. Retain empowers businesses and enhances customer engagement by:
- Cost Reduction: Businesses can mitigate the financial burden associated with physical mailings by leveraging Retain’s digital platform.
- Automation: Retain automates the delivery process of EVNs, expediting consumer engagement and alleviating the need for manual interjections.
- Scalability: Accommodating organizations of all sizes, Retain’s scalable architecture offers a versatile solution tailored to individual needs in real time.
- Deliverability: With a deliverability rate of 87%, Retain can help ensure your EVNs make it to your recipients and give you the best chance at productive engagement in debt recovery.
And in many cases, simply sending the validation notice electronically will more effectively encourage customers to pay the balance owed or at least set up a payment plan with you—studies have found that digital-first customers contacted digitally make 12% more payments than those contacted via traditional channels.
Retain makes these benefits accessible to any business or law firm, regardless of their familiarity with digital communications (although we can help with that too!), and offers EVNs as both a feature integrated within our larger service offerings or as a stand-alone solution.
It’s time to stop buying stamps and start hitting “send” when it comes to delivering validation notices to past-due customers. Learn how to improve your communication with consumers in a digital channel that results in faster account resolution by scheduling a consultation here»»
Retain makes these benefits accessible to any business or law firm, regardless of their familiarity with digital communications (although we can help with that too!), and offers EVNs as both a feature integrated within our larger service offerings or as a stand-alone solution.
It’s time to stop buying stamps and start hitting “send” when it comes to delivering validation notices to past-due customers. Learn how to improve your communication with consumers in a digital channel that results in faster account resolution by scheduling a consultation here»»