Consumer Insight Drives Collection Call Compliance and Risk Mitigation

Debt collection operations for years have been using different tools to maximize the effectiveness of their collectors. Getting the right account to the right collector has always been the best way to ensure efficiency and profitability.

A huge sector of vendors has been in place to supply accounts receivable management operations with analytics packages to score and route accounts to the right collection departments. Many software suites are used by collection managers to effectively predict a portfolio of account’s likely revenue. These projections are critical to collection business planners in the budgeting and forecasting process.

But ARM organizations are now using a new set of tools to identify accounts that require special treatment before they are routed to collectors and before they are factored into predictive equations. And they are doing it not only in the name of revenue, but to mitigate risk and ensure legal compliance.

By accurately identifying and updating accounts that are mostly likely to cause legal trouble, collection departments can confidently forward remaining accounts to predictive analysis and collection.

Increasing the Likelihood of Call Compliance

First, cell phone numbers must be identified for special handling. It is, of course, illegal to call cell phones with an autodialer. But the recent proliferation of mobile phones has led to compliance issues on other fronts.

Call time violations – calling consumers before 8am or after 9pm, local time – have traditionally been the easiest to avoid. Reputable collection agencies have always gone to great lengths to prevent collectors from calling accounts outside of mandated hours; and it’s typically been easy since the vast majority of Americans live in only four time zones.

But population migration combined with ease of phone number porting has led to a dramatic increase in consumer complaints about collectors calling in prohibited hours. Since a consumer can open a cell phone account in California and keep that number when they move to New York, more care has to be put into verifying a consumer’s residence than simply relying on an area.

Add to the mix the increased ease of porting landline numbers to cell numbers and the situation becomes very sticky. An absolute verification must be made on a place of residence when a cell number is identified, especially one that has been ported from a landline. Collectors no longer have the luxury of assuming an address originally attached to a phone number is still valid.

In addition to identifying cell phone numbers, collection portfolios must be scrubbed for all of the other types of accounts that have special limitations. Bankruptcy is the highest on this list. If a consumer is in bankruptcy, it is imperative that debt collection operations know. In addition, data about deceased debtors, incarceration, and potential fraud must be run against any collection portfolio.

Reducing Consumer Litigation Risk

The “low-hanging fruit” in the litigation risk mitigation world are accounts belonging to consumers that have previously filed legal action against ARM firms. There are a handful of services — many of which integrate with current analytics suites — that can identify such accounts in any portfolio. Here, collection agencies are taking a proactive extra step to ensure they are not unknowingly calling on a person that has previously filed a lawsuit claiming FDCPA or other consumer statute violations.

After those few accounts have been identified, the task becomes spotting accounts that could lead to lawsuits from consumers that have not previously been involved in litigation. This is a little trickier.

Recognizing consumer data patterns that may lead to litigation is an art that is not yet fully fleshed out. But a good rule of thumb is to stick to behaviors that govern collection call compliance. After all, a consumer can file a suit much easier than a state attorney general for a violation of the FDCPA.

By spending more time and effort before a collection call is ever made, recovery departments can dramatically mitigate some of the risk inherent in collection work. And with so many vendor options available, it is relatively easy to start the process.

Editor’s Note: This article originally appeared in the latest issue of Know Your Debtor, a free quarterly newsletter focused on the U.S. consumer environment. Make sure you’re registered to receive insideARM’s newsletters on your User Profile page.