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Sending your Model Validation Notices (MVNs) is already expensive with the cost of stamps increasing in price five times since 2021 and another 7.8% or $0.05 increase that started Sunday, July 14, 2024. This recent price increase was the second in 2024 and sixth since January 2021. And these increases can have big impacts on your bottom line, if they haven’t already.
What is driving the consistent cost-increase?
The use of first class mail, the USPS’s main revenue driver, has been in a nosedive since 2007. In July 2007, the agency's volume of single-piece first class (bill payments, letters, cards) was at 2.7 billion items. As of June 2023, that number has fallen to 900 million, a 68% reduction in volume. With more consumers opting in to paperless bills and communications, this number will only decrease in years to come, which drains the agencies number one source of revenue. The rate increase also takes into account their obligation to pay retirees pension and benefits, which is more responsible for the recent increases than inflation itself.
These continued rate increases are part of a 10-year initiative to reach profitability that was enacted in 2021. USPS reported a $6.5 billion loss in fiscal year 2023 and is projecting a $6.3 billion loss for fiscal year 2024.
What does this mean for your servicing operations?
With no clear end in sight to the rate increases for a forever stamp—and the requirement by the CFPB to send a model validation notice to a consumer as your first communication with them about their debt—your cost-to-collect will continue to rise. Especially considering the charge-off rate increase and more consumer accounts being charged-off and placed with agencies for collections.
More importantly, it's cost-ineffective given where consumer communication preferences are today. You’re sending a required and important message—via the most expensive communication vessel possible—that most consumers will never open to respond to. Collecting from consumers that are in default is already a difficult task, and each time you send another MVN you’re immediately eating into your profitability potential in an already razor thin margin potential based on contingency fee payment structures with clients.
How do you plan to reduce or maintain your cost-to-collect when you have to send the MVN on every account you service?
One way to avoid this likely continuous cost bump is to send your MVNs electronically. Moving your model validation notices to digital channels is not only more cost-effective than sending snail mail but will also net you higher engagement, which could lead to a resolution with the consumer before having to make additional contact attempts.
But if you go digital, you need to make sure the MVN is reaching the account inbox and not landing in junk/spam, which is harder than you think.
We already know that you’ll never know if someone opens the physical letter you sent them, but if you use the right digital communication strategy and partner, you’ll not only know who it was successfully delivered to (received it in their inbox), but who opened and even who clicked, showing intent to resolve, or at least that they’re aware of their debt.
The value of knowing who is opening and who is clicking can signal to you as an operator that this is their preferred communication method/channel and how the majority of your attempts to collect on a debt should be communicated to them individually. Additionally, tracking these metrics can also give you insight to which are the right messages and what the right time to send may be to help you reach the desired outcome of resolution.
Although you could build a strategy and process yourself that is compliant and highly-effective at reaching the inbox and then manage all of the components, finding the right partner and platform can deliver strong engagement performance and also save you time and resources you’d have to spend upfront and managing thereafter to create it on your own. Sending your first communication via email over snail mail is not only more cost-effective, it will ultimately help you optimize your servicing strategy from the MVN.
Retain by TrueML Products makes these benefits accessible to any business or law firm, regardless of their familiarity with digital communications. Retain’s Electronic Validation Notices (EVNs) get into 87% of the actual inboxes for accounts you send to—and you’ll find out who doesn’t prefer to receive digital communications and who to focus your collection efforts on via phone and maybe even snail mail.
Whether you’re a law firm, debt buyer, or any business with delinquent accounts, Retain is your ready-to-use solution for reaching and retaining customers while boosting repayment. 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.
Optimizing your operations and strategy is critical, especially with charge-off trends increasing and not showing any signs of slowing down in the next 12 months. With credit card balances growing higher and more new accounts entering delinquency each month, it's important to run a lean, mean, operating machine that scales as your servicing volumes will through 2025.
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.