As part of a four-part blog series on best practices for third-party collections, we are exploring portfolio segmentation. In our first post, Inventory Segmentation 101: Back to Basics,” we tell you why the segmentation process matters. In Portfolio Monitoring: The Definitive Guide,” we discuss why account monitoring is critical to segmentation efforts. In the third post, “Managing Risk — and Protecting Your Bottom Line — With Smarter Segmentation,” we tell you how to use segmentation to manage risk.

Your greatest asset — and biggest expense — is manpower. With margins continually tightening, it just makes sense to focus employees’ time and effort on an effective  way to generate revenue: targeting consumers who have an ability to pay, and de-prioritizing the ones who are more trouble than they are worth.

Here are three groups that are typically a waste of time and resources, and could land you in legal hot water if you continue to target them:

#1. Deceased people

Simply put, it’s impossible to collect a debt from someone who is no longer with us. Additionally, the Federal Trade Commission (FTC) states that family members are usually not obligated to satisfy the debts of a deceased family member using their personal finances.1 Beyond that, calling a grieving family to collect a debt is seen in poor taste, and it creates a negative consumer experience.

Avoid the whole unpleasant situation by scrubbing your inventory for deceased records. Then once you identify them, separate them from the general population into a controlled environment with strict oversight.

#2. Incarcerated consumers

Attempting to collect from an incarcerated consumer will get you nowhere fast, and contacting family members to collect the person’s debts could get you sued.

Guard against this situation by scrubbing your portfolio to flag incarcerated consumers before activating the accounts for your team. Then, move those individuals into a specialized process, or out of your working inventory.

#3. Higher Risk Consumers

In addition to federal and state regulations, third-party collectors are also under fire from consumers who file repeated lawsuits alleging abusive and harassing practices. The practice is forcing many collectors to allocate a sizable budget to settling lawsuits, many of which are frivolous. This is not an efficient practice, nor is it good for the bottom line.

A better practice is to sidestep the courtroom altogether. With past behavior being the strongest indicator of future actions, you can reduce your risk by obtaining the lawsuit history of consumers in your portfolio — and placing the consumers in specialized workflows, or in many cases, suppressing communication with them entirely.

An easier way to focus on the right people

In the “good” ‘ole days, you would contact your entire portfolio and manually note which accounts to avoid in the future. Luckily,  it no longer has to be that way.

Information solutions make it easy to identify and deactivate uncollectible accounts beforethey are contacted. Employees can now stop wasting time on dead ends and stay focused on generating revenue. You can now save future costs of scoring and skip tracing those consumers who will likely never pay.

Take the first step now: Call our team at 800.856.5599 to schedule a complimentary analysis and let TransUnion help you determine if inventory segmentation with portfolio monitoring can maximize your recovery efforts.

 

[1] Source: Federal Trade Commission, July, 2011. https://www.consumer.ftc.gov/articles/0081-debts-and-deceased-relatives.


For more from TransUnion, visit their blog TransUnion Blog Header

Advertisement