When I entered the collection industry almost two decades ago we had hardly any of the tools at our disposal that we do today. I can remember the days of calling a lumber yard in a small town because I knew the builder I was looking for would be known in the area. I also remember speaking to a relative who said the consumer was in their bowling league, looking up the nearest bowling alley and calling the consumer there. Now practices like that are frowned upon and a thing of the past due to heavy oversight from regulators. Even calling a reference or nearby may be more risk than it’s worth just based on the probability of generating a potential complaint. In accordance with the Fair Debt Collection Practices Act, you can communicate with a third party one time in order to obtain location information which is defined as home address, home phone number, and place of business.
The art of skip tracing has come a long way from the days of using the criss cross directory, phone book, directory assistance, or having a Rolodex full of contacts from other companies with whom you share information. While the county tax assessor, court house, and utility records remain a good source of information, more and more businesses are getting away from in-house manual skip work and are looking for ways to automate and outsource the process allowing their employees to focus on the most important thing, collecting money.
There are many factors to consider when choosing a skip trace service. Are they compliant, what are their success rates, and most importantly, what is the cost?
If you are going to outsource your skip tracing needs it is important to ensure the skip provider is compliant with GLB, FDCPA, FTC and FCC regulations. Do they have a license, carry proper insurance, and can they provide references? I would suggest having them complete a security questionnaire and conducting an onsite visit prior to signing a contract, which is becoming more of a requirement from clients.
When choosing the right partner, ask:
• How do they compare against their competitors?
• What are their hit rates?
• Do they focus on quantity or quality? More numbers to call equals more liability and cost. You want to make sure you are getting the most current and accurate information.
Are they willing to run a test file to compare against their competitors or your manual approach? Another factor to consider is the price per hit. Closely monitor to make sure the hits you are receiving are unique to what you already have. Does the price per hit decrease based on volume? Do they continuously monitor for new information or collection triggers?
There are many databases out there sharing consumer information making it easier and easier to find people. One of the most effective cost efficient sources for location information is social media. The only caveat is the compliance factor. How many of you receive a notification when someone visits your LinkedIn page? You are accessing personal consumer information so the concern is how you control how far your collector goes in order to reach the consumer. What controls can you put in place to ensure your collectors aren’t sending private messages, posting on the consumers wall or even using social media for personal reasons.
For those of you who still have employees manually skip tracing accounts, always remember when searching, less is more. Start by using the least amount of consumer information and refine as needed to get the most accurate information available. For instance, if the consumer you are searching for has a unique last name, start by searching only their last name closest to their most recent address. When searching for a place of business try including the consumer’s zip code, so you can find the closest location to the consumer’s home and broaden your search as needed.
In conclusion, there’s not a cookie cutter approach to skip tracing. Every company has their own strategy, budget, and resources. Whether you continue with the manual approach or choose to automate your skip tracing needs, it is important to remember compliance, success rates, and cost are the most important factors.
Sam Eidson is the Director of Compliance for Delta Outsource Group, Inc. He also serves on the Board of Directors for the Missouri Collectors Association.