As part of the festivities to mark the end of one calendar year and the start of a new one, I ask different professionals from across the accounts receivable management industry for their predictions for the coming year — what do they think is going to happen, what kind of year is it going to be for collection operations, etc. But that’s not where the fun ends. The following year, I ask those who made predictions to revisit them and see what they got right and what they got wrong. A year ago, a number of industry professionals made predictions about 2024. Here is how they think those predictions stacked up.
Dennis Barton
2024 Prediction
Next year will see a rise in legal collections. No, that’s not just wishful thinking. Regulations will continue to hamper efforts to credit report, especially medical debt. This will force creditors and agencies to mourn the loss of their biggest bat and turn their lonely eyes to collection attorneys. In doing so, regulators will indirectly and inadvertently increase the number of judgments against consumers and garnishments of their wages. This is contrary to their motives and will result in increased revenues for creditors and collectors alike. Once again, collection attorneys make the world (or at least our industry) a better place. You’re welcome.
What he has to say about that prediction a year later
Last year, I predicted we would see a rise in collection lawsuits. Was I right? Hell, yeah! History was on my side. Since 2013 (and likely before that), the volume of collection lawsuits has continued to grow nationwide. As state and federal legislators and regulators increase restrictions on collection agencies, creditors and agencies have increased their reliance on litigation to avoid the expense and exposure associated with ongoing regulation. The shifting political winds of 2025 may reverse the level of regulation and even slow the pace of collection suit filings, but the upward trend of those filings will likely persist.
Jeff Freedman
2024 Prediction
My crystal ball has been a little cloudy of late so hopefully I am on point this time. We expect that the disruption in our industry, that resulted from the pandemic, will finally dissipate completely and we will get back to delinquency and charge off cycles more in line with pre-pandemic expectations. We do expect however for there to be a steady increase in delinquencies throughout 2024 stemming from debt hitting all time highs in key asset classes in conjunction with the safety net of stimulus, built up savings, and moratoriums and forbearances on payments all now having dried up.
We also expect the continued march toward digitization and self-service channel offerings to heat up throughout the industry with more agencies recognizing their importance to surviving and thriving into the future. We further surmise that more agencies will be deploying AI, ML, and LLM to drive down costs, improve overall compliance, and provide better and more personalized service to customers. The push for digital, along with continued pressure on margins, will likely lead to increased industry consolidation.
Lastly, not really going out on a limb here but the results of the presidential election will have significant ramifications on our industry depending on who the occupant in the White House is (may not be felt in 2024 but the seeds will certainly have been planted in 2024).
What he has to say about that prediction a year later
So, I wouldn’t exactly say I went out on a limb with my predictions but I will say that I think I did pretty well with my forecasting.
We did, in fact, see delinquency and charge-off cycles revert back to what we were seeing pre-pandemic. While I forecasted a steady increase in placements, we actually saw a much steeper increase in placement volume then even I was expecting. As for digitization usage continuing to heat up, I think it is pretty evident that this is happening in all areas of the accounts receivable ecosystem. All agencies, large and small, are, in fact, trying to find ways to compliantly and economically deploy these digital tools. I do believe we are also seeing movement throughout the industry that is causing agencies to seek mergers or outright acquisition in order to best position themselves to take advantage of the current environment. Finally, while we are still about a month away before President Trump takes office, I do believe we are already seeing some effect from his win in November and we will certainly see a significant change as the leadership at the CFPB, in particular, becomes staffed by Trump appointments.
Chris Schumacher
2024 Prediction
As 2023 has come to a close I think 2024 could bring its own challenges to the collection industry. Several factors drive this prediction. Firstly, agencies could continue to consolidate as the cost for compliance and security continues to grow; this could be cost prohibitive for many smaller entities. Secondly, the consumers’ ability to pay could be challenged due to increased credit card debt and rent, as well as loss of government stimulus payments. Thirdly, client’s placements could take another year to ramp up, while contingency fees continue to be pushed lower. I predict that agencies will overcome these challenges as they continue their focus on artificial intelligence and machine learning (specifically around automating routine tasks), data-driven decision making, and consumer preference on communication and payments. 2024 will have its challenges, yet, I believe the collection industry will continue to persevere by our professionalism with ethical and respectful conduct helping consumers find ways to pay their debts with honor and dignity. I also predict in 2024 that the San Francisco 49ers will win Super Bowl LVIII.
What he has to say about that prediction a year later
Looking back at my predictions from the start of 2024, I can see that some of my concerns were indeed realized, while others may have played out differently.
- Consolidation: The trend towards industry consolidation continued, as predicted. Many smaller agencies faced significant pressure due to rising compliance costs, the need for advanced technology (like AI/ML), and the competitive landscape.
- Consumer Financial Strain: Unfortunately, my concerns about consumer financial health were largely accurate. Rising inflation, higher interest rates, and the gradual withdrawal of government support undoubtedly impacted many consumers’ ability to meet their debt obligations. This translated into increased delinquency rates and challenges for several collection agencies.
- Client Pressures: Client pressures regarding placement timelines and fee structures remained a significant factor. Many agencies faced downward pressure on fees while simultaneously dealing with longer placement cycles. This squeezed margins and forced agencies to optimize their operations.
- 49ers Super Bowl Champs: Well let’s just say the 49ers underperformed all year long and were a big disappointment. I’m looking forward to 2025!
Sara Woggerman
2024 Prediction
Ethical Artificial Intelligence and Governance will be a strong theme in 2024. Artificial Intelligence (AI) and Large Language Models (LLM) made significant advancements in 2023, paving the way for exciting advancements in technology leading to better decisions regarding how and when to communicate with consumers, and what payment options or settlement offers to present to those consumers. With each positive AI innovation there is counter compliance risk to be considered. Compliance professionals across the industry should be thinking about how to implement an Ethical Artificial Intelligence and Governance Program for their organization that is fluid enough to adapt with technology advancements and regulatory compliance risks. Understanding what and how data is being used, as well as testing for disparate consumer impact, will be critical. We should also anticipate that the Consumer Financial Protection Bureau (CFPB) will be looking specifically for AI related consumer risks during their examinations and for their examination manuals to be updated accordingly. However, as we’ve seen in the past, don’t bet on an examination manual update before we see the first enforcement action. As with all new technology implementation it’s wise to adopt these tools in phases, with compliance controls, and testing throughout, to help your operational and compliance teams fully understand the positive and negative impacts to your organization before fully embracing.
What she has to say about that prediction a year later
My prediction that Ethical Artificial Intelligence and Governance would be a central theme in 2024 proved to be correct. Advancements in AI and LLMs have prompted organizations to place greater emphasis on ethical considerations and to establish flexible governance frameworks. While discussions around compliance risks increased, the pace of regulatory updates, such as changes to CFPB examination procedures, has been slower than expected. On a positive note, industry leaders have begun implementing AI in phases, particularly with the use of virtual agents, and conducting thorough testing for consumer impact. This reinforces the importance of balancing technological innovation with strong compliance measures. Additionally, the focus on understanding and mitigating disparate consumer impacts has remained crucial, underscoring the need for proactive, data-driven compliance strategies.
As part of the festivities to mark the end of one calendar year and the start of a new one, I ask different professionals from across the accounts receivable management industry for their predictions for the coming year — what do they think is going to happen, what kind of year is it going to be for collection operations, etc. But that’s not where the fun ends. The following year, I ask those who made predictions to revisit them and see what they got right and what they got wrong. A year ago, a number of industry professionals made predictions about 2024. Here is how they think those predictions stacked up.
Dennis Barton
2024 Prediction
Next year will see a rise in legal collections. No, that’s not just wishful thinking. Regulations will continue to hamper efforts to credit report, especially medical debt. This will force creditors and agencies to mourn the loss of their biggest bat and turn their lonely eyes to collection attorneys. In doing so, regulators will indirectly and inadvertently increase the number of judgments against consumers and garnishments of their wages. This is contrary to their motives and will result in increased revenues for creditors and collectors alike. Once again, collection attorneys make the world (or at least our industry) a better place. You’re welcome.
What he has to say about that prediction a year later
Last year, I predicted we would see a rise in collection lawsuits. Was I right? Hell, yeah! History was on my side. Since 2013 (and likely before that), the volume of collection lawsuits has continued to grow nationwide. As state and federal legislators and regulators increase restrictions on collection agencies, creditors and agencies have increased their reliance on litigation to avoid the expense and exposure associated with ongoing regulation. The shifting political winds of 2025 may reverse the level of regulation and even slow the pace of collection suit filings, but the upward trend of those filings will likely persist.
Jeff Freedman
2024 Prediction
My crystal ball has been a little cloudy of late so hopefully I am on point this time. We expect that the disruption in our industry, that resulted from the pandemic, will finally dissipate completely and we will get back to delinquency and charge off cycles more in line with pre-pandemic expectations. We do expect however for there to be a steady increase in delinquencies throughout 2024 stemming from debt hitting all time highs in key asset classes in conjunction with the safety net of stimulus, built up savings, and moratoriums and forbearances on payments all now having dried up.
We also expect the continued march toward digitization and self-service channel offerings to heat up throughout the industry with more agencies recognizing their importance to surviving and thriving into the future. We further surmise that more agencies will be deploying AI, ML, and LLM to drive down costs, improve overall compliance, and provide better and more personalized service to customers. The push for digital, along with continued pressure on margins, will likely lead to increased industry consolidation.
Lastly, not really going out on a limb here but the results of the presidential election will have significant ramifications on our industry depending on who the occupant in the White House is (may not be felt in 2024 but the seeds will certainly have been planted in 2024).
What he has to say about that prediction a year later
So, I wouldn’t exactly say I went out on a limb with my predictions but I will say that I think I did pretty well with my forecasting.
We did, in fact, see delinquency and charge-off cycles revert back to what we were seeing pre-pandemic. While I forecasted a steady increase in placements, we actually saw a much steeper increase in placement volume then even I was expecting. As for digitization usage continuing to heat up, I think it is pretty evident that this is happening in all areas of the accounts receivable ecosystem. All agencies, large and small, are, in fact, trying to find ways to compliantly and economically deploy these digital tools. I do believe we are also seeing movement throughout the industry that is causing agencies to seek mergers or outright acquisition in order to best position themselves to take advantage of the current environment. Finally, while we are still about a month away before President Trump takes office, I do believe we are already seeing some effect from his win in November and we will certainly see a significant change as the leadership at the CFPB, in particular, becomes staffed by Trump appointments.
Chris Schumacher
2024 Prediction
As 2023 has come to a close I think 2024 could bring its own challenges to the collection industry. Several factors drive this prediction. Firstly, agencies could continue to consolidate as the cost for compliance and security continues to grow; this could be cost prohibitive for many smaller entities. Secondly, the consumers’ ability to pay could be challenged due to increased credit card debt and rent, as well as loss of government stimulus payments. Thirdly, client’s placements could take another year to ramp up, while contingency fees continue to be pushed lower. I predict that agencies will overcome these challenges as they continue their focus on artificial intelligence and machine learning (specifically around automating routine tasks), data-driven decision making, and consumer preference on communication and payments. 2024 will have its challenges, yet, I believe the collection industry will continue to persevere by our professionalism with ethical and respectful conduct helping consumers find ways to pay their debts with honor and dignity. I also predict in 2024 that the San Francisco 49ers will win Super Bowl LVIII.
What he has to say about that prediction a year later
Looking back at my predictions from the start of 2024, I can see that some of my concerns were indeed realized, while others may have played out differently.
- Consolidation: The trend towards industry consolidation continued, as predicted. Many smaller agencies faced significant pressure due to rising compliance costs, the need for advanced technology (like AI/ML), and the competitive landscape.
- Consumer Financial Strain: Unfortunately, my concerns about consumer financial health were largely accurate. Rising inflation, higher interest rates, and the gradual withdrawal of government support undoubtedly impacted many consumers’ ability to meet their debt obligations. This translated into increased delinquency rates and challenges for several collection agencies.
- Client Pressures: Client pressures regarding placement timelines and fee structures remained a significant factor. Many agencies faced downward pressure on fees while simultaneously dealing with longer placement cycles. This squeezed margins and forced agencies to optimize their operations.
- 49ers Super Bowl Champs: Well let’s just say the 49ers underperformed all year long and were a big disappointment. I’m looking forward to 2025!
Sara Woggerman
2024 Prediction
Ethical Artificial Intelligence and Governance will be a strong theme in 2024. Artificial Intelligence (AI) and Large Language Models (LLM) made significant advancements in 2023, paving the way for exciting advancements in technology leading to better decisions regarding how and when to communicate with consumers, and what payment options or settlement offers to present to those consumers. With each positive AI innovation there is counter compliance risk to be considered. Compliance professionals across the industry should be thinking about how to implement an Ethical Artificial Intelligence and Governance Program for their organization that is fluid enough to adapt with technology advancements and regulatory compliance risks. Understanding what and how data is being used, as well as testing for disparate consumer impact, will be critical. We should also anticipate that the Consumer Financial Protection Bureau (CFPB) will be looking specifically for AI related consumer risks during their examinations and for their examination manuals to be updated accordingly. However, as we’ve seen in the past, don’t bet on an examination manual update before we see the first enforcement action. As with all new technology implementation it’s wise to adopt these tools in phases, with compliance controls, and testing throughout, to help your operational and compliance teams fully understand the positive and negative impacts to your organization before fully embracing.
What she has to say about that prediction a year later
My prediction that Ethical Artificial Intelligence and Governance would be a central theme in 2024 proved to be correct. Advancements in AI and LLMs have prompted organizations to place greater emphasis on ethical considerations and to establish flexible governance frameworks. While discussions around compliance risks increased, the pace of regulatory updates, such as changes to CFPB examination procedures, has been slower than expected. On a positive note, industry leaders have begun implementing AI in phases, particularly with the use of virtual agents, and conducting thorough testing for consumer impact. This reinforces the importance of balancing technological innovation with strong compliance measures. Additionally, the focus on understanding and mitigating disparate consumer impacts has remained crucial, underscoring the need for proactive, data-driven compliance strategies.
