Get All Access for $5/mo

Take Advantage of Electronic Communication Texts and e-mails could be more effective and less invasive for your collections.

By Michelle Dunn

Opinions expressed by Entrepreneur contributors are their own.

Collectors are starting to use electronic communications to locate debtors or past-due customers. Many people have public social networking profiles that a collector can use to find a mailing address, phone number, cell phone number, place of employment and other contact information by searching those sites.

It seems that text messages and e-mails are becoming the preferred and most effective way to increase collections. I know of at least one collection agency that has seen a 12 percent increase in collections by using electronic communication. E-mail and text messages seem to be a less invasive form of communication than a phone call, and your customers have the sense of being in control of when and if they respond.

Some collectors obtain customer consent for correspondence by text before the sale by simply adding a bit of wording to the credit application. The wording is similar to this:

"By signing this document, customer agrees to accept and understands that text messages may be used when servicing the account, including the collecting of debts."

Others have taken it a step further, adding a more detailed outline of how text messages will be used and having customers sign and acknowledge the following provision:

"You the customer authorize us (company name) to send you (customer) a text message at any mobile number at which we reasonably believe we can contact you, for any lawful purpose, including but not limited to:

  • Suspected fraud or identity theft on your account
  • Obtaining information necessary to service your account
  • Collecting on your account
  • Notifying you of important issues regarding your account."

If this is something you're considering, it's important to remember that all messages must include a mechanism for the consumer to opt out of receiving further text messages at any time. This protects the consumer as well as the collector, especially since the law does not specifically address text messages being sent as a form of dunning. If you decide to send billing alerts to customers by text message, it's imperative the customer not be charged for the text and that your company incur any charge associated with the text.

Here are some dos and don'ts for using electronic communication in your debt-collection efforts:


  • Skip tracing or locating debtors
  • Researching collection tools, such as software or skip tracing tools
  • Credit reporting
  • Use database technology to maintain account information on customers
  • Get authorization for each payment
  • Research place of employment


  • Send instant messages to a debtor about a debt
  • Initiate unauthorized additional payments on a bank account.
  • Send a friend request to a debtor on any social networking website

Michelle Dunn is an award winning author and columnist and has been called the nation's authority on collecting money. She is the founder and CEO of Michelle Dunn's Credit & Collections Association, one of the top 5 women in collections, and one of the top 50 most influential collection professionals in the industry.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

Some Car Dealerships Are Selling Cars the Old Fashioned Way Following Massive Cyberattack

CDK software services an estimated 15,000 dealerships in the U.S.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

50 Cent Once Sued Taco Bell for $4 Million. Here's How the Fast-Food Giant Got on the Rapper's Bad Side.

The brand suggested that 50 Cent change his name to match its "Why Pay More?" value menu promotion prices. The rapper was not amused.

Business News

Apple Is Working on Making Its $3,499 Vision Pro More Affordable — and Mainstream. Here's How.

Apple's product is at least three times more expensive than Meta's version.

Business News

Jack Dorsey Says It Will Soon Be 'Impossible to Tell' if Deepfakes Are Real: 'Like You're in a Simulation'

Dorsey said we will "not know what is real and what is fake" in the next five to 10 years.

Business News

Mark Cuban's Google Account Was Hacked By 'Sophisticated' Bad Actors

The "Shark Tank" star said someone "called and said I had an intruder and spoofed [Google's] recovery methods."