Most business-to-consumer operations possess an arsenal of action jargon, and debt collection agencies are no exception with their charge-offs, garnishments, scrubs and skip traces. In a perfect world, agencies are able to negotiate a fair settlement for clients so they don’t face revenue loss to account charge-offs and consumers aren’t subjected to wage garnishments. If debtors cannot be located, then skip tracing is used to update their contact information.
After being assigned new accounts from clients, best-in-class debt collection agencies conduct daily scrubs of available records to determine whether or not each consumer is deceased or involved with an active bankruptcy, prior litigations related to the Fair Debt Collection Practices Act (FDCPA), or protection provided by the Servicemembers Civil Relief Act (SCRA). If any of these conditions apply, then the account is cancelled prior to initiation of any collection efforts and the client is notified of the action.
New accounts transcending scrub are placed through a series of proprietary filters to determine the best approach and placement in the collections process. Accounts are subsequently ready for collections action pursuant client preferences — strategy one (letter writing) and or strategy two (phone calling).
Collection Letters and Phone Calls
Best-in-class agencies send written courtesy alerts to consumers within a day of assignment, followed by a series of reminders and escalating demand letters. Consumers may also receive broken promise letters, declined payment letters or payment receipts if applicable.
New accounts are loaded once scrubs are completed with calls continuing through the duration of the collection assignment. Agencies and their collectors must be compliant with all relevant state regulations as well as the all-important Telephone Consumer Protection Act (TCPA).
Skip tracing is initiated at this stage if collectors encounter incorrect consumer contact information.
Skip tracing is the approach used by agencies to locate debtors with invalid last-known addresses or phone numbers. The term describes the process of accessing private and public records to locate debtors who have “skipped” town. Sources include court and law enforcement records, credit reports, DMV records, income tax returns, libraries, phone books, Social Security Administration, the US Postal Service and public utility statements.
Skip Tracing Providers
Skip tracing is best handled by large service providers such as Experian, TLO/TransUnion and LexisNexis that are often associated with credit reporting. Debt collection agencies pay monthly fees to receive skip tracing data that is updated around the clock. For Example, the impressive Experian File One database includes 210 million consumer phone records, representing over 90% of US adults.
Debt collection agencies often consolidate their digital requests to skip tracing vendors in batches that are processed overnight. Ideally, the skip tracing information is uploaded directly to the agency’s software, thus allowing seamless operation the following day.
Reasons to Outsource or Not DIY
Most agencies utilize large service providers because the demands of skip tracing transcend their available resources, so it stands to reason that companies implementing in-house collection efforts would be ill-advised to attempt skip tracing themselves. As tempting as they may appear, “pay-as-you-go” online people locators are generally dismissed by those in financial services as being ineffective and inaccurate.
On the other hand, outsourcing debt collections to a best-in-class agency simultaneously provides skip tracing services in addition to other critical functions such as keeping pace with the latest compliance, certification, data security and call center technology.
Contact Optio today to discuss individualized collection strategies that include reliable skip tracing.