Report Details How Federal Government Tested Collection Letters To Improve Recovery Rates

How was the federal government able to get 45% more Americans who owed the government non-tax debt to pay online?

By making the address that they had to put in shorter.

That was part of an initiative by the White House’s Social and Behavioral Sciences Team to improve recovery rates for the Treasury Department’s Debt Management Service, which collects on delinquent non-tax debts for all federal government agencies. While the initiative did not lead to higher recovery rates, the higher percentage of people making online payments was a very welcome unintended benefit.

The Social and Behavioral Sciences Team (SBST) recently released its first annual report, which summarizes a number of different projects that it worked on, including the Treasury Department initiative. What’s very interesting is that the report details the methodologies that the SBST used to try and improve recovery rates.

The new letter was simplified (e.g., multiple mailing addresses linked to the Department of Treasury were removed from the letter and replaced with a single address; the web address for online payment was shortened substantially), personalized (individuals were addressed by name rather than by debt ID number), and the total debt owed was emphasized in the letter’s opening line. In addition, based on recent research from the United Kingdom showing that social comparisons can increase tax collections, the new letter highlighted the fact that 91 percent of Americans pay their debt on time.

While trying a number of different tactics had no impact on getting more delinquent Americans to make their payments, there are some positive takeaways for the collections industry. Shortening the website URL is definitely a big one. Any collection agency taking online payments should test using shorter URLs to see if that improves online payment rates. Secondly, there is some comfort in knowing that the federal government is in the same boat as the collections industry when it comes to trying to figure out how consumers think.


Check Also

19 Companies Seeking Collection Talent

During this, The Great Resignation Era, I thought it would be helpful to start a …

Leave a Reply

Your email address will not be published. Required fields are marked *