Israeli Start-Up Experiments with Automated Debt Collection Approach

At first glance, the differences between the U.S. and Israeli debt collection industries couldn’t be more stark: In Israel, lawyers are typically responsible for debt collection, while in the U.S., the debt collection licensing requirements vary from state to state. But TrueAccord, a new start-up founded by Ohad Samet, actually goes over the heads of both forms of collection, in favor of a tech-centric approach for original creditors.

TrueAccord automates the debt-collection process. Original creditors can use the software to collect their own debts, instead of hiring a third-party collection agency. Also, instead of employing human operators, the system engages the debtor in dialogue using digital messages – text messaging, email or telephone calls. The message and its medium vary according to the debt and the debtor.

Samet started TrueAccord based on the theory that various debtors react to different stimuli. By using technology to define the different consumer types, the TrueAccord system can then approach customers about their debt with language they can understand. The art is to find the middle ground between forgiving the debt completely and needing to employ an outside collection agency – which may eliminate consumer intimidation altogether.

But how would this theory hold up against legal realities in the U.S.? Since this is a product developed for the use of original creditors, FDCPA issues aren’t a factor: the statute does not apply to entities collecting their own debt, and TrueAccord has not said it is selling its services as a third-party debt collector.

Electronic messages are only possible with express consent of the consumer for that particular phone number; TrueAccord will, of course, need to make sure it adheres to the TCPA in these matters.

Still, in 2013 TrueAccord put out a closed beta version on a platform accessible to any business in the United States. “So far we’ve been working with specific clients, large customers such as oDesk, Shopify and Stripe, and now we’re approaching the general public. Anyone owed a debt that is documented in a contract can log into the website and register, and we will collect it,” Samet told Ha’aretz.

TrueAccord now has offices in Silicon Valley and has already raised $2 million.