For businesses and law firms initiating outreach to consumers with debt in collections, 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. However the cost of sending physical mail continues to rise and is no longer a preferred communication channel for many consumers.
And perhaps an even better question for businesses: can this required validation notice instead be sent via email and still be fully compliant?
Debt collection software like Retain, streamlines the process of sending digital Model Validation Notices, also known as Electronic Validation Notices (EVNs). This 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.
Let’s look at the costly challenges of traditional paper letters, concerns around compliance, and the impact consumer communication preferences can have on your collection success.
An Unavoidable Compliance Requirement, But an Avoidable Cost with Digital Debt Collection
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.
IDLs were originally sent via mail, but sending letters has become significantly more expensive. 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, but it can also negatively impact repayment rates from consumers who prefer digital contact. In contrast, digitally sending MVNs present solutions to these challenges and advantages for both businesses and customers:
- Cost Efficiency: By leveraging email and digital communications, businesses can significantly reduce overhead associated with paper-based correspondence.
- Digital Paper Trail: Digital MVNs 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. It’s usually easier and more efficient to achieve higher MVN delivery rates using digital communications..
- Time and Resource Savings: By transitioning to digital MVNs, full-time employees (FTEs) and outsourced partners can redirect their efforts towards other business goals, optimizing operational efficiency.
This process is 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 businesses need to contend with. There are also 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, debt collection software like Retain is designed to streamline this process.
Delivering Digital Model 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 digital MVNs can be more of an undertaking for in-house teams to execute efficiently and effectively on their own.
Enter Retain by TrueML Products—whether you’re a lender, law firm, or any business with delinquent accounts, Retain is white-label debt collection software that lets you collect more while spending less.. Retain is a scalable, AI-powered digital delivery tool to help you optimize customer engagement and automate your digital communications without ballooning your operating costs..
With Retain, businesses can seamlessly transition from traditional paper-based IDLs to sending compliant MVNs via email. Retain empowers businesses and enhances consumer 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 digital MVNs, 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 94%, Retain can help ensure your MVNs 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. In fact, studies have found that digital-first customers contacted digitally make 12% more payments than those contacted via traditional channels.
Digital Debt Collection is Easier with Retain
Retain makes the benefits of digital debt collection accessible to any business or law firm, regardless of their familiarity with digital communications, and offers digital MVNs 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 digital MVNs to past-due customers. Learn how to improve your communication with consumers in their preferred digital channel that results in faster account resolution by scheduling a consultation here»»
