Debt collectors are the true ancestors of Facebook’s emotions experiment

Feeling blue? Luong Thai Linh/EPA

Facebook’s efforts in 2012 to manipulate the emotions of its users for part of an academic study have left the kingpin social network struggling to explain its actions. Maybe part of their mistake was to publish. The 1960s debt collectors who conducted some very similar experiments were far less cavalier.

It’s not hard to see what the fuss is about when a study of almost 700,000 people leaves many subjected, without their consent, to deliberate forms of emotional manipulation. Facebook has since offered a partial apology although not for the experiment itself but because “it was poorly communicated”, according to its chief operating officer Sheryl Sandberg.

So, Facebook allowed the experiment to be presented as academic research and opened up some of its inner workings to public scrutiny. It published, and was damned.

Bill Buchanan has made clear that the kinds of experiments that Facebook conducted are not that different to practices that we are routinely subjected to as we browse online. We are all part of a great big ongoing experiment. I’ve written elsewhere about how payday lenders like Wonga are part of this.

Mind games

Corporations have long sought to understand and exploit consumers’ emotions, and it’s not just advertisers. Alongside payday lenders, I study debt collectors and when you look at the history of debt collection in the US you come across experiments with resounding echoes of the Facebook study. Like most forms of consumer experimentation – but unlike the Facebook research – the results were never intended to be debated amongst the wider public.

In the 1940s, US debt collectors were increasingly realising how important it was to understand what was going in inside debtors’ heads. One claimed in 1946 in the industry magazine The Collector, that as much as “three-fourths of [a] collector’s procedure is based on the fundamentals of psychology”.

However, talking to one another about debtor psychology is one thing. Being able to know exactly what to do about it is quite another. It took until the 1960s for the technology to emerge that would enable collectors to do properly what had until then only been done informally: run experiments with debtors.

The technology was the punch card, a form of proto-computerisation, which made it far easier to collate large volumes of data and to automatically customise documents in relation to stored information.

Experimenting with debtors

One example I came across during research for a forthcoming book stands out. Inspired by an article by a psychologist on the use of anxiety in debt collection, a company called Coast-to-Coast Collections Service began to run experiments with its debtors. “What we wanted was a system of demands that would be psychologically effective”, wrote owner R. H. Carder in 1961, “something that would, through a psychological effect on the average mind, automatically create a maximum average money reaction”.

Full of holes. Debt collection experiments got punchy in the 1960s. Marcin Wichary, CC BY

With the help of its brand new IBM machines, they sent out almost 650,000 letters to around 200,000 debtors. The aim was to test the effect of different letter designs and letter sequences, with the ultimate ambition being to create a carefully calibrated letter sequence which would build up the anxiety level of the debtor from an initial “welcome” letter to later letters where they felt they had no option but to pay. The effect Carder was looking for was to make the debtor feel “as though he were standing on a railroad track with an express train on its way”.

To do so, letters and debtors were organised into test groups and control groups. Variables could then be tested. These ranged from using colour, to using cartoons to create a friendly tone in early letters, to different wordings, some of which tried to appeal to emotions like ‘honour’, other which were more aggressive, for example using words like “final recourse”. They even tested using letters that appeared to come from lawyers, an early example of a practice that has drawn Wonga back into the firing line this week. The results, writes Carder, were an unequivocal success.

Champion Challenger

Such experiments were very early examples of techniques that persist in today’s debt collection industry. Nowadays, these are sometimes referred to as “Champion Challenger” methodologies, in which a new “challenger” approach to collections work is tested against an existing “champion”. If the challenger wins then, in theory, it is rolled out across that particular set of debtors.

Many of us, then, are unwittingly part of experiments, in which our reactions to a range of emotional stimuli are being tested. But so too were previous generations of consumers. And like us, they often didn’t know about it. Given that the Facebook furore has likely highlighted to companies the dangers of making such experiments public, it is probable that future generations will know even less.