The use of AI has rapidly increased over the past few years and doesn’t appear to be slowing down anytime soon. Many believe that AI tools will be a permanent fixture in our lives and businesses. At the present moment, though, AI is still a budding industry and many are concerned about its use in financial services, including debt collection. 

Common Company and Consumer Concerns

As a company conducting in-house collections or utilizing a third-party debt collection agency, you’re likely excited about the possibilities that AI can bring to the space—but also worried about the potential downsides.

Chief among these concerns is privacy and compliance, as AI systems often handle sensitive consumer data. If AI uses that data inappropriately, becomes a target of malicious actors, or malfunctions in some way, your business—and consumers—could be at risk. A data breach, for instance, can be devastating, costing a company money and manpower to fix and forever losing consumers’ trust.

Even without a large-scale violation, AI can make compliance more difficult by obscuring decision-making processes and lowering transparency. Many employees use AI tools without the knowledge of their superiors, further complicating compliance. A report by McKinsey & Company found that 78% of employees use AI tools not provided by their employer. This further opens a company up to risk and compliance violations.

While consumers are also worried about AI mishandling their personal information, they’re concerned about AI trying to steal it as well. A study from Queen Mary University of London discovered that AI voices and voice cloning tools can replicate human voices so closely that they can trick consumers into thinking they’re real people. Study participants believed that cloned voices were real 58% of the time and believed that generic AI voices were real 41% of the time. If misused by scammers, this tool could cause serious damage.

Despite how common AI is becoming, many consumers still don’t trust it. Forrester’s 2025 “Consumer Insights: Trust In AI” reports found that only 24% of Americans feel knowledgeable about AI, and only 15% of American adults trust companies that use AI with consumers.

Benefits of AI

Despite the risks, AI is still an incredible technology with a lot of benefits if used correctly and with care.

AI can save debt collection companies money in various ways. Repetitive tasks like processing payments and sending payment reminders can be automated, saving time and reducing errors. AI can handle routine communication at scale, reducing the need for large agent teams and lowering operational costs. AI pilot programs in US agencies reported a 35% reduction in missed payment reminders, speeding up debt recovery cycles.

On a related note, AI has been shown to improve debt recovery rates across the board. Predictive analysis allows agencies to find trends in consumer behavior, find out the likelihood of repayment, and create customized collection strategies to improve the chances of debt recovery. These analytics can also help agencies develop more long-term strategy around everything from high-risk accounts to the day-to-day collection process.

Even though many customers are distrustful of AI, the technology can greatly improve customer service. AI chatbots and virtual assistants offer personalized communication to consumers with questions or issues. These services are incredibly responsive; available 24/7 and answering queries nearly-instantly. AI can also be used to tailor outreach strategies, particularly for high-risk accounts. This not only increases the likelihood that these accounts will be paid, but also increases customer satisfaction.

ACA Actions

American Collectors Association (ACA) International consistently stays up to date with the latest information about AI in the debt collection space. As AI adoption has increased across financial services, their advocacy on AI aims to support both protection of consumers and operational efficiency of debt collection agencies. Their recent advocacy has been focused on the following points:

• Supporting risk-based AI regulation to prioritize mitigating potential harm
• Differentiating interactive programs that utilize pre-programmed datasets from more advanced AI systems under the law
• Increasing flexibility for consumers, allowing them to access information and services beyond business hours
• Preventing discrimination from AI tools
• Urging policymakers to consider and address the risk of AI being used for fraud
• Utilizing AI to monitor and streamline legal and regulatory compliance

ACA continues to provide comments on federal request for information and to work with policymakers to ensure that consumers are protected and collection agencies have their needs met.

FFR does not currently use AI, and we will be sure to let you know if and how we decide to implement it in the future.