Joining the dots inside the telco – what dunning and onboarding have in common

Dunning – the process of communicating with customers about overdue amounts and getting them to pay what’s owed – has never been the most exciting part of telecoms provision. But it is vital. If customers use services and don’t pay, we don’t have a business.

It has to be said though, that telecoms firms have a somewhat ropey history on dunning. Frequently, they chase loyal customers too hard, moving to threats and cutting them off, without properly communicating with them to discover what the issue is. This is because dunning is not a customer-centric process and is often outside the CX domain, being approached as a purely financial process, rather than seen as an integral part of relationship management. That’s a mistake that leads to more mistakes and negative consequences that could easily be avoided.

Dunning exposed

For some customers the process of dunning is a shock and quickly becomes a nightmare; but with increasing interconnectedness combined with social media, dunning tales can quickly become a nightmare for CSPs as well.

In the UK this issue rose up the agenda during the coronavirus pandemic, with both the regulator Ofcom and the government saying that telecoms firms must change how they treat vulnerable customers and stop threatening disconnection as a tactic, or using unfair billing practices. Ofcom highlighted examples of where victims of serious crime continued to be billed and chased for debt on phones they couldn’t use because they’d been handed over to police.

Because dunning is approached as a completely separate process to CX, it usually doesn’t use the wide range of data available about the customer. Customers may enter dunning inappropriately because the payment process is inflexible and CSRs don’t have the power to intervene and assist the customer to pay by offering options that make it easier (such as moving them to a more appropriate tariff, freezing charges, giving more time to pay and so on).

Some customers may have become vulnerable due to illness, losing their job or a significant change in circumstances. Failing to accommodate these change and insisting on contractual obligations guarantees customers will leave and poor publicity will be generated. The change in circumstance may only be temporary; the damage to brand perception will be permanent. And poor dunning processes contradict those telcos who are advertising how inclusive they are: you’re not inclusive unless you are good at supporting your most vulnerable customers.

Handing dunning over to third parties is frequently a bad idea for a telco. The customer will continue to believe they owe the debt to the telco and associate the third party’s behaviour with them even when the telco no longer has any control over what happens next.

A cautionary tale from Australia

An example of why handing over dunning to debt collectors is such a bad idea is exemplified by the recent case of a man from Melbourne who’s now living in Hong Kong. While he was in Hong Kong, his identity was stolen back in Australia using his old driver’s licence number, date of birth and previous home address.

His ID was stolen twice: with a cyber criminal taking out a fraudulent A$700 personal loan. When this was flagged up, the fintech involved did its checks, realised the application was fraudulent and took action. This was a stressful experience for the customer and took several months to clear up.

But worse was in store.

The customer was approached over another debt taken out in his name – this time for a 24-month mobile plan complete with an iPhone X. Of course there were huge red flags: the fraudster had requested the phone be delivered to a different address to the one the customer had previously lived at, and the contract was unsigned.

Contracting 101 tells us that no signature means no contract and no liability. Or so you’d think. But the customer was pursued for the debt nevertheless, increasing the charges substantially. Despite supplying evidence they’d been resident in Hong Kong at the time, as well as explaining their ID had previously been stolen, they were told they’d need to submit a police report or complete a statutory declaration. All for something he knew nothing about.

The debt firm did drop the case when the press intervened. (You can read all the details of the case here.) Optus had long since washed its hands of any responsibility.

Reading this with a telco hat on, there are so many things wrong here from an onboarding, ID verification and dunning perspective. Optus should:

  • have done (better) due diligence on checking the customer’s ID at onboarding and not supplied anything against a contract that had no signature on it. Honouring a contract without these basic checks in place indicates a process that is wide open to fraud. They may even have been deliberately targetted.
  • have been wary that the fraudster requested the phone be sent to an alternative address.
  • have ‘bricked’ the phone when made aware that there was something wrong – rendering it useless for continued use or resale.
  • have believed the individual when he repudiated the charge – evidence such as previous ID theft and new home location should have opened up a fraud case immediately.
  • not have handed responsibility to a third party as this made the situation worse and reflected on the competence of the brand.

The lesson here is that reliable digital ID verification is essential for good CX and good business practices. Blaming customers when your own processes are insufficient is not a good look. We believe every telco needs to take another look at their dunning processes, which are long overdue an overhaul.

Dunning must be placed within the context of CX and other interconnected customer processes (eg onboarding) and not just maintained as a separate financial process. It must become more data-driven, personalised and customer centric.

Many genuine and decent customers encounter difficulty in paying bills at some time or another. Instead of threatening them, CSPs need to work with them to enable payment and help them manage their costs. Ultimately, this maintains brand image, retains customers and costs less to administer. Choices on what to do to resolve payment problems could be offered via self-service to further reduce the cost of administering.

While smoothing the onboarding process is essential, this cannot be done at the expense of proper checks. There is absolutely no need to choose between effective checking and easier onboarding – it’s possible to do both.