Compliance in debt collection today is more than just a legal necessity – it is a strategic success factor for companies that see receivables management as part of a modern, customer-centric financial process. Especially in times of automated processes, AI-supported communication and rising consumer expectations, regulatory requirements are becoming ever more complex. This means that careful implementation and monitoring of regulatory requirements is increasingly in the spotlight, and responsible handling of personal data in debt collection is of crucial importance.
Anyone working with a debt collection service provider must ensure not only that the provider acts in compliance with data protection law, but also that it meets the highest standards on a technical, organisational and ethical level – regardless of the national market in which it operates. In many countries, requirements based on the European General Data Protection Regulation (“GDPR”) or comparable national data protection laws apply.
In this article, we show what matters when it comes to compliance in the context of data handling in debt collection – and what role certifications such as ISO 27001 or new regulations such as the European AI Act play.
Data Protection in debt collection: GDPR remains the benchmark
The General Data Protection Regulation (GDPR) continues to form the basis for the data protection-compliant handling of consumer data. Debt collection service providers generally act as controllers within the meaning of Art. 4 GDPR – with all resulting obligations: from the implementation of technical and organisational measures according to the current state of the art, the creation and maintenance of data protection documentation such as records of processing activities and data protection impact assessments, to responding to every single request arising from data subject rights, e.g. providing information about the processing of personal data of the respective person.
Debt collection agencies must, among other things, observe:
- Ongoing transparency regarding data use and data flows
- Maintenance and further development of technical and organisational measures (TOMs)
- Clear explanation of data processing in receivables management for consumers
- Thorough and regular training of all employees – tailored to the respective departments
A legally compliant debt collection agency always informs data subjects transparently – about processing purposes, legal bases, retention periods and data subject rights, such as the right to object.
Data Protection as a strategic competitive advantage at PAIR Finance
PAIR Finance is one step ahead of compliance requirements. They are not only seen as mandatory, but are a central component of the business model: debt collection service providers who are always up to date with data protection and even ahead of legal requirements are generally less likely to face customer complaints and lawsuits.
Ensuring compliance forms the basis for creating a consistent, secure and positive debt collection experience. Digital debt collection strategies help to ensure compliance with regulations and minimise weaknesses in receivables communication.
GDPR-compliant data protection compliance at PAIR Finance is ensured by a multi-level system of legal, technical and organisational measures:
Clear legal bases & transparency
Every data processing activity is tied to specific purposes. PAIR Finance carefully distinguishes between different processing purposes, such as receivables management under Art. 6(1)(b)/(f) GDPR or consent under Art. 6(1)(a) GDPR. For international activities, for example in Switzerland, the requirements of the Swiss Data Protection Act (Art. 31) are observed, whereby data is only processed with consent, for contract fulfilment or overriding private interest.
Technical security measures as a foundation
The PAIR Finance technology platform relies on pseudonymisation & aggregation: personal data is anonymised for analysis to prevent conclusions about individuals. For payment data security, only certified payment service providers (e.g. Apple Pay, Sofortüberweisung) with end-to-end encryption are integrated.
Organisational structures for seamless compliance
A data protection officer (contactable at datenschutz@pairfinance.de) monitors compliance at PAIR Finance. Compliance managers systematically handle data protection-related complaints, including deadline control and statements. These clear responsibilities ensure that data protection is embedded throughout the organisation.
Data subject rights & control for consumers
PAIR Finance enables consumers to view, correct or have their stored data deleted – provided there are no statutory retention obligations. The processing of technical usage data is based on revocable consent, giving consumers maximum control over their data.
External audits & training for continuous improvement
PAIR Finance employees are regularly trained on GDPR requirements and data protection-friendly processes. Every data processing activity is logged to provide evidence to supervisory authorities in the event of enquiries.
A concrete example: in AI-supported debt collection communication, only aggregated data is analysed to enable individualised communication without personality profiling. Through this combination of transparency, technology and process control, PAIR Finance implements data protection not just as an obligation, but as a competitive advantage – with measurably lower complaint rates and higher customer satisfaction.
What characterises a GDPR-compliant debt collection company?
A professional debt collection agency is characterised by a holistic data protection concept – consisting of legal, technical and organisational measures. These include:
- Documented processing purposes & legal bases
- Transparent information obligations for consumers
- Secure data transmission & access controls
- Record of processing activities (ROPA)
- Internal data protection officers and regular audits
- Clear processes for safeguarding data subject rights
- Training for employees & technical logging
- Deletion concepts in accordance with retention periods
AI-supported compliance: What the AI Act means for debt collection service providers
More and more debt collection processes are being automated – from the choice of communication channel to risk assessment based on payment or behavioural data. But the use of AI in the sensitive context of debt collection is not unregulated.
With the new EU AI Act, adopted in 2024 and coming into force in stages, the development and use of artificial intelligence is classified according to risk categories. Regardless of the specific risk, employee training (“AI literacy”) and transparency in the use of AI in direct customer service are essential.
High-risk AI-supported processes are subject to strict requirements:
- Risk assessment and documentation obligations
- Transparency obligations towards data subjects
- AI governance and human oversight mechanisms
- Proof of fairness and non-discrimination
AI-supported compliance in debt collection therefore means: companies must carefully check which data they process, how decisions are made – and whether they are ethically justifiable. There is no one-size-fits-all solution for AI governance through templates; it requires a precise examination of the company’s own processes and data flows.
Sabrina Ermshaus, Data Privacy & AI Governance at PAIR Finance, comments on the AI Act: “Data protection requirements can no longer be the sole focus of a modern company. They are indispensable and must continue to be part of the standard repertoire and implemented accordingly. However, it is important that the requirements of the AI Act are now also taken into account, even if these do not focus on the handling of personal data. Both sets of regulations must nevertheless be considered, understood and implemented in context if you want to set standards in the AI age and keep up with other leading fintechs. I am therefore pleased that PAIR Finance started implementing the first related projects as early as summer 2023 and that we have developed rapidly since then.”
ISO 27001: A must for legally compliant debt collection
A central building block for data protection in debt collection is ISO 27001 certification. This proves that a service provider has a systematic, documented information security management system (ISMS) – clear evidence that sensitive consumer data is professionally protected.
An ISO 27001-certified debt collection company has, among other things:
- Documented risk analyses to identify potential vulnerabilities
- Technical & organisational measures (TOMs) established and under ongoing development – from access controls to data encryption
- An established training system for employees to anchor data protection and security in daily practice
- Emergency and recovery plans for data loss scenarios defined
Especially for companies that pass on customer data to third parties, such certification is a decisive test. It reduces liability risks and protects the company’s own brand from reputational damage.
General approach to compliance requirements in debt collection
Not only data protection and the use of AI are in the focus of regulatory efforts and in-house compliance departments for implementation. The larger the company or group and the more international its set-up, the more legal requirements must be taken into account.
Although the EU has created uniform rules in some areas, there are still many differences at national level, which makes uniform action difficult. Therefore, commonalities in national regulations – for example in professional law, consumer protection or industry standards with ethical aspects – should be identified and implemented uniformly. If necessary, special regulations should be checked and implemented in the company with external help.
“PAIR Finance has created a system here that enables the highest compliance standards to be met in a short time through interdisciplinary collaboration and the projects implemented. We adhere to our processes and our key factors, which enable us to successfully overcome regulatory hurdles,” says Daniela Gaub, Group General Counsel at PAIR Finance.
Key factors can include the following:
- Know your business: Only if the business model is understood and the processes are known can it be checked which laws apply and what should be regulated by instruction/policy. For example, all PAIR Finance employees are regularly trained to ensure that they have all the necessary knowledge about PAIR Finance and the requirements relevant to us.
👍 Do’s 👎 Don’ts Connecting with colleagues Silo mentality
(“I’m only responsible for area XY”)Regular interdisciplinary exchange Asking questions - Stakeholders, risks and resources:
Internally:
- Knowledge and skills are built up through training or targeted new hires to ensure compliance with requirements in all relevant areas of the company and in all countries in which the company operates
- Relevant laws and requirements are analysed in depth to carry out an impact analysis. Explicit resources are planned for this (both in terms of personnel and by providing appropriate tools).
- Clear competencies in the company: it is communicated transparently who is responsible for individual departments and operational processes in the company and can thus provide the basis for the relevant research (“input for legal & compliance”)
- Clarity about who is responsible for implementing legal requirements or introducing procedural instructions and policies in the company.
- Also with regard to the creation of results/implementations and the presentation of results, the corresponding responsibilities are communicated transparently internally (“output from legal & compliance”)
- Time and expectation management – time buffers and realistic processing times are a must
- Planning and clarification of budgets
Externally:
- Transparent communication of external sources of knowledge and appropriate contact points if further information is required (e.g. via associations, specialist discussion groups, events + LinkedIn)
- Clarity about who can provide external support in serious cases (e.g. in the event of major risks) – especially with regard to possible liability
👍 Do’s 👎 Don’ts Clarify the budget upfront – avoids cost discussions and financial surprises Focusing on a single topic without planning for buffers (surprises always happen) Consider a Plan B resource Legal/Compliance department creates guidelines alone, without involving colleagues or additional research Set up external consultations Networking!
Error culture and incident management
No process is 100% error-free and where people (or sometimes technology) work, mistakes also happen. Of course, the aim is always to avoid this.
What is important is to deal well with mistakes. A company only acts carefully and compliantly if it has built and maintains a proper incident management system.
If suspected cases become known that indicate non-compliance, it must be a priority for every employee to report this to the responsible department. The case will be reviewed there and, if necessary, further steps will be taken:
- Consultation with the data protection officer
- Technical and/or organisational measures
- Additional training
Due to the high focus on data protection, this is again a particular focus at PAIR Finance.
Conclusion: compliance is not an obstacle, but a lever
Those who think of compliance, data protection – and security as well as technology together have the best chances of:
- Lower legal, technical and financial risks
- Further growth through a stable foundation
- Greater efficiency through automated, compliant processes
- More trust among consumers and partners
- Secure (AI) systems
Compliance in debt collection is therefore more than a legal necessity – it is a sign of responsibility, fairness and entrepreneurial maturity and represents a strategic key – for sustainable growth, strong brands and satisfied consumers.
Are you looking for a partner to help you implement legally compliant debt collection digitally, simply and successfully?
Find out what PAIR Finance can achieve for you.
