Chances are that you’ve received at least one scam email, text or phone call within the last week or even day. And you’re not alone, a CNET survey found that an unbelievable 96% of Americans get at least one scam message every week. Over the past few years, there’s been a dramatic increase in financial scams and they’re getting more elaborate. In 2024, 2.6 million consumers reported scams to the FTC, as more bad actors are posing as legitimate companies.
With more financial scams aimed at consumers, it’s challenging for collection communications to break through the noise. Scams are also shifting the behavior of consumers and making people more suspicious of unexpected messages. In this blog post, we’re going to break down how financial scams are impacting debt collection strategies and provide some tips that could help your business navigate the situation.
Financial Scams Are Causing Consumers to Loss Trust and Patience
With scam messages getting more frequent and elaborate, consumers face an unprecedented attack on their financial security. Many people know someone in their life who has fallen victim to a financial scam and might have even experienced one themselves. This has led to two big consumer behavior shifts that make debt collection strategies more challenging:
- Loss of Trust: The rise in financial scams has made it more likely for a consumer to find a communication they weren’t expecting less trustworthy. Since more scam messages are coming down the pike through more channels, it’s harder to get people to engage with legitimate collections communications.
- Low Patience: When a scam message comes through, it’s easy to delete or ignore it. It’s a common behavior that all of us do, and financial scams have honed that behavior even more. If your collection communication doesn’t grab attention right away, chances are that the consumer will delete it.
Financial Scammers Are Hurting the Reputation of Collectors
Unfortunately, many financial scams involve convincing consumers that they owe a debt that isn’t real. This fabrication of a new and pressing debt adds a sense of urgency for consumers. It’s a tactic used by scammers to try and get consumers to make a snap decision to send money – and every one of these scam interactions has the potential to tarnish the reputation of legitimate collector messages.
What can make this challenge even more difficult is that scammers often pretend to be real companies. Even if your collection communications are branded, they could still face scrutiny from customers. The proof of this trend can be found on search engines across the internet. Some of the most popular searches ask whether a debt collection communication is a scam or not. These searches have broken into the top queries for many legitimate businesses.
Businesses Need to Add More Assurances for Consumers in Debt Collection
Debt collection strategies need to put more resources into being trustworthy and proving their legitimacy. One of the best ways to accomplish this is by honoring a customer’s communication preferences and digital channel best practices. Scammers aren’t concerned with sending a message through someone’s preferred channel, at the right time, with content that has empathy and includes a clear opt-out option
Another good way to add assurance for consumers is to lay the groundwork for expecting digital communications and provide clear answers to questions. Preemptively informing customers that your business uses email or SMS for communications is a good way to do this. Other best practices include directing customers to an FAQ or providing detailed information on why they’re receiving this notification. It’s also helpful to avoid aggressive tactics and language that stresses immediate action, that way your collection communications are less likely to be confused for a scam.
Threats and Intimidation in Financial Scams
A key reason why financial scams are negatively impacting digital debt collection strategies is how many financial scams use illegal threats. To add more pressure to pay off a fabricated debt, scammers often tell consumers they’ll lose even more money, face legal consequences or even face jail time. Even though they don’t have the legal authority to follow through, these kinds of intimidation tactics are cruel and often do the most reputational damage against legitimate collection communications.
Going through or even hearing about an experience like that is sometimes enough for a consumer to ignore any type of repayment message. This can create a negative feedback loop where legitimate collection communications get looped in with scams in the minds of consumers.
What does this mean for your debt collection strategy? It means incorporating more “human” language, building trust and giving customers the opportunity to engage with the message on their own terms. It’s also important to provide clear connections to other content (like links to your website) that add confidence in the message being authentic.
Improve Your Recovery Rate with Digital Collection Software
Retain by TrueML Products is a white-label digital collection software that’s powered by machine learning technology. It streamlines digital communications at scale for your business and offers a personalized experience for your customers. Retain leverages data from millions of consumer interactions to send personalized communications through the right channel, at the right time and place for every customer, and with best practices that keep them from looking scammy.
If you’re ready to limit the impact of financial scams on your debt collection strategy, Retain is here to help. Schedule a free consultation with our team to learn more about how your business can collect more from happier customers.
