Skip tracing has always been one of the most highly contested aspects of debt collection from inside and outside the industry. For some, skip tracing is viewed as an art form, highly coveted as a differentiator setting them apart from competitors. For others, skip tracing is looked at as a resource drain that doesn’t necessarily provide the return on investment for which they had hoped. Regardless of the take on skip tracing there is one thing that is certain, skip-tracing as we have known it has been and will continue to evolve for better or worse. The days of obtaining and dialing every possible related phone number associated with the consumer, their friends, family, neighbors and employers are gone.
While the Consumer Financial Protection Bureau hasn’t commented in depth about skip tracing activities, what they have made clear is they will not tolerate third parties related or unrelated to the consumer of record being bothered while a debt collector seeks to establish communication. The expectation is that a debt collector attempts to reach consumer(s) at the phone number(s) provided by the consumer, or in the event the phone number(s) are not available or no longer valid, the debt collector takes appropriate steps to confirm any additional phone number dialed will lead to the consumer of record. That leads to the question, what are the “appropriate steps?”
As with most regulatory and legislative direction, the ultimate answer is open for interpretation. Fortunately, we do have some insight and guidance to help steer our collective ships as safely as possible through turbulent waters.
Vet Data Sources
The first step is to vet and know your data sources. When a provider of data approaches you to do business, it is very important to find out who their data sources are and how they aggregate their data. It is not uncommon for data providers to withhold their exact sources of data. However, they should certainly be able to divulge the general sources and type of data they aren’t just receiving, but more importantly providing, since ultimately you are responsible for the data you are receiving regardless of how provided and where it came from.
Choosey About Data
Secondly, most data providers these days know which of their data sources are better than other elements of their data sources. Because data providers obtain consumer data from multiple sources, the reality is some data is more accurate and reliable than other data. The accuracy and reliability of the data provided to your operation is critical. Having an in depth understanding of this is very important. There are two types of data providers which I consider short-term and long-term providers. Short-term providers give you a lot of data, giving the appearance their hit rate is high. In reality the hit rate may be high while the quality rate may be low. Short-term providers are more interested in a quick buck than a long-term partnership. Long-term providers look to become a partner, understanding your business needs and developing a strategy that values quality over quantity while also focusing on being cost effective.
Lastly, it is important to schedule regular check ups with your data providers. Always remember to inspect what you expect. If your data provider is consistently providing a hit rate of 31% and then all of the sudden begins to provide a hit rate over 50%, this is cause for attention. This example of a spike in hit rates means something is most likely being done with the data on the back end, whether the data provider opened up the current sources or added news ones. Be sure to include in your service agreements language that requires the data providers to notify you before changing or adding sources not mutually agreed upon. The days of setting and forgetting our data providers are now behind us. As our great President Ronald Reagan said, “trust but verify.”
Nick Jarman is the owner of RightAway Consulting & Coaching. Jarman served the last three years on the Board of Directors for ACA International and is the past President of the Missouri Collectors Association.