A New Study May Finally Convince Collection Agencies To Stop Calling People

texting girl cell phone

Photo: Ollie Crafoord on Flickr

Collection calls could go away soon–only to be replaced with text messages.Texting debtors for repayment is more effective than calling, according to a recent report by the National Bureau of Economic Research. Text messages are more difficult to overlook and make the customer feel more of a personal connection with their lender:

The text messages do not change any contract terms between the borrower and the bank. Yet messages can induce repayment.

Including the loan officer’s name also increased the changes the debtor would pay, the study says.

Using two micro lenders in the Philippines, the researchers assessed whether texting was more effective than calling. Chance of on-time payment increased 6 per cent when text messaging was used, according to the study:

Our results do suggest a role for personal relationships between borrowers and loan officers. Perhaps (repeat) borrowers feel indebted (pun intended) to their loan officer, and the message triggers feelings of obligation and/or reciprocity that increase repayment effort.

Maybe harassing collection calls could stop soon. Because texting is shown to be more reliable and cheaper than calling, it makes sense that banks would try it out.

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