Since August of last year, PDCflow has partnered with the California Association of Collectors (CAC) to bring our readers in-depth advice on running a successful, compliant collection agency. The subjects, ranging from day-to-day operations such as telephone collection communications to high-level topics like creating collection settlement campaigns, first appeared as the curriculum of the CAC’s Collection Boot Camp courses. Our collaboration with the boot camp panel has allowed us to convert the material from three classes into a series of blog articles and downloadable guides.
This final installment of the series puts the last piece of the debt collection puzzle in place with a detailed guide on skip tracing. Learn from CAC President Kelly Parsons-O’Brien, CAC MAP attorney June Coleman, and CAC members Shawn Suhr and Courtney Reynaud the best practices, available tools and legal considerations tied to locating a debtor.
What is skip tracing? And who is a skip?
Parsons-O’Brien describes skip tracing as ”the art and science of compiling information on missing consumers for the purpose of locating them and collecting overdue accounts.” A few of the indications you have a “skip” — a missing debtor — are when a consumer’s mail is returned, their phone is disconnected, or when they have changed employers.
Skip tracing guide – The different ways to classify a skip
- Company Skips – These are caused by a clerical error when data is entered. If an address or other personal information is entered incorrectly, it can be difficult to locate the debtor. This can be minimized by scanning documents so they are easy to refer to later. Also be sure to train collectors to review documents thoroughly.
- Unintentional Skips – This refers to debtors who leave the area without notifying creditors and agencies of a change in address. Because forwarding orders only stay on file for 90 days, a doctor bill or other statement may miss this deadline and not find its way to the correct consumer.
- Intentional Skips – “These people are usually trying to run from something bigger than a debt collector,” says Parsons-O’Brien. “They’re trying to get away from their lives or their circumstances.” These may be more difficult to locate than unintentional skips because they do not want to be found.
- Skips With Criminal Intent – These are typically the people who are using multiple variations of social security numbers or other tactics specifically to evade paying creditors.
Vendor selection for skip tracing information
It can be difficult to decide which vendor to use for your skip tracing information. Here are a few tips for picking a vendor that is right for you.
- Free Trials – Skip tracing software vendors often offer free trials of their products. This is the best way to discover whether a product is right for your agency before you commit to spending the money. When testing these products, try searching for information on yourself. This is a good way to be sure what you’re getting from the system is accurate.
- References – Peer recommendations can be a great help in finding a good skip tracing system. This can help you choose the right product for your business. Also, knowing what others pay might provide leverage when you’re negotiating with a salesperson.
- Agency Needs – Do you need a product with unlimited searches? Is cost a big factor in making a decision? Think about how the tool will be used within your agency, and which types of accounts it will be used on.
If you will only use a product on large accounts, you may be able to afford something a bit more costly if it provides more accurate or thorough information.
Some agencies don’t have the need or resources for a full-time employee to handle their skip tracing. These products can help fill the gap left by not having a dedicated employee in the office.
A few popular skip tracing vendors
Skip tracing guide – Websites and other sources
Along with products specifically designed to help locate debtors, there are other ways to find information on your skips for free. Social media, other websites and government documents may provide helpful information at no cost. These sources include:
Google and Google Earth
Local City and County Resources
Business license departments
– Criminal cases
– Civil action
County tax records
State, Federal and Military Sources
State contractors license
Department of Consumer Affairs
Federal inmate locator
Post office (verification letter)
Active duty lookup
Skip Tracing Guide – What to Keep in Mind
Remember “permissible purpose” – Coleman urges collectors to keep “permissible purpose” in mind when skip tracing. “Most of these services get their information from credit reports. If you are using a service that gets its information from credit reports, you have to have a permissible purpose.” The Fair Credit Reporting Act sets forth various permissible purposes to obtain credit information. The relevant permissible purpose for collection agencies is normally a bill arising from a credit transaction. If you do not have a permissible purpose, you cannot use a service that derives information from credit reports without violating the Fair Credit Reporting Act. A few examples of types of bills that DO NOT arise from a credit transaction are:
- Parking fines
- Governmental fines
- Any time a consumer did not ask for a product or service in exchange for payment
Understand your product – If you are limited to non-credit report information because you do not have permissible purpose, Parsons-O’Brien says most skip tracing vendors can provide reduced or non-credit-reported information. When you begin your relationship with your skip trace vendor, you will indicate whether you have a permissible purpose, and this will limit or expand the sources of information. To avoid violations, be sure you understand how the product you choose works and what you have communicated about permissible purpose; you could otherwise end up paying attorney fees or damages for an inappropriate search.
Policies and procedures – Check that your agency has up-to-date policies and procedures on how to properly use your skip tracing products. Many of these tools will deny your company access if there is an indication the systems are being abused. You may be flagged company-wide if one agent attempts, for example, to search for information on celebrities for their own amusement. In cases of suspected abuse, your agency will be responsible for proof of appropriate actions you have taken. Official reprimand or termination may be necessary to regain your access to the tool. Abusive use of a skip tracing product may also be a violation of law, and support a lawsuit against the agency. One suggestion for avoiding this type of issue is to require collectors to include each debtor’s account number along with searches, so there is accountability with the agent working each case.
Protect your employees – Beware of how you use social media during searches. Parsons-O’Brien notes she is the sole user of Facebook during skip tracing at her company. This allows her to avoid exposing staff to potentially inappropriate content that may appear on the timelines of those she is searching. This also protects against an employee falsely impersonating a friend to have access to Facebook content only viewable by friends. Convincing a debtor that the collector should be “friended” on Facebook could be an FDCPA violation.
Know third party verification rules – Be cautious when you’re contacting a third party to verify location information. You can only contact them on one occasion, you must identify yourself by name, and you must disclose who you work for if asked. In addition, this disclosure cannot reveal that you are attempting to collect a debt and you should state you are confirming or correcting location information.
Does the debtor have an attorney? – “If your debtor is represented by an attorney, you can only talk to the attorney,” says Coleman. “If this is the case with your debtor, you cannot call third parties and ask them information about location.”
Characteristics of a perfect skip tracer
While skip tracing tools are helpful, having a human touch can be a great asset. This job is not for everyone. So, what are the characteristics that make up a good skip tracer?
- Good telephone voice
- Skillful listener
- Ability to gain informant’s confidence
- Persuasive abilities
- Determination, detachment and discipline
You may find that the type of employee that makes a good skip tracer may not be successful at everyday resolution of accounts.
Training a Skip Tracer
Effective communication and listening skills are key. A good skip tracer will:
- Use active listening
- Ask closed-ended questions
- Ask open-ended questions
- Use reflective listening
These tactics are helpful for learning more about your debtor. Remember, though, your only aim is to gain location information. These tactics are not allowed for any means other than verifying a debtor’s location.
For specific examples of the types of questions a good in-house skip tracer should be using. Download the Skip Tracing: Best Practices Guide.
Too small for skip tracing? Try scoring
If your agency can’t support a full-time skip tracer, scoring accounts can be helpful to increase your revenue too. Using a scoring product can help you to improve the collectibility of your accounts without the cost and time commitment of implementing skip tracing.