Three Risk Management Tips for Collections

Estimated reading time: 4 minutes

Collections is a constantly changing landscape — collection agencies deal with changing consumer data and a variety of different parties, all while having to maintain compliance with different debt collection regulations. There are a lot of factors collection agencies have to deal with in terms of risk management, but one factor you can control is the data you’re using. 

When you use risk management solutions like identity verification, records scrubbing, and up-to-date contact information from a public and private records database, you’ll be able to manage risks more effectively while simultaneously increasing efficiency for better debt recovery. Here are three tips for risk management for collections.

Risk management with ID verification and business authentication

Collection agencies often deal with a variety of different accounts that come in and out of the collections cycle. You don’t want to accidentally pursue the wrong person for collections or send information to the wrong individual, so when working with a new account or third party, it’s important that you’ve verified both the identity of the account and the identity of all the people you’re transmitting information to for third-party risk management. 

So what is ID verification? Identity verification is the process of cross-checking different records to confirm the identity of an individual. If you’re wondering how to verify a person’s identity, you can perform identity verification in Tracers by inputting the information you already have about an account, like a name or address, and Tracers will cross-check and confirm that information across other records in the database. This allows you to quickly verify the identity of every party you’re working with so you can avoid the risk of using inaccurate data or transmitting information to the wrong person.

Collection agencies may also have to collect on businesses, and it’s important to verify all the information you have about that business, such as business name, address, owners, and debts, in order to manage risk when dealing with a business. To authenticate a business in your risk management process, you should use a business records search as one of your debt recovery resources. You can verify owners of the business, business registrations, DBA/FBN records, FEIN-Tax ID Records, UCC filings, and corporate records. Verifying and authenticating a business’s records will help you manage risk of using incorrect records for debt recovery assessment so you can be sure you’re making informed collections decisions about that business.

Maintain compliance by scrubbing bankruptcy and deceased records

A common risk that arises in collections is pursuing debtors who you can’t legally collect on, and it’s important to understand who you can’t collect on in order to maintain compliance with regulations. If you try to collect on uncollectible accounts, you may have to pay damages or regulation fees. The problem is that situations can frequently change — someone may have passed away or filed for bankruptcy are being entered into your collections cycle. If you’re not up-to-date on these changes, you run the risk of acting in a noncompliant way. To stay up-to-date on changes for stronger risk management strategies, you should scrub records with a public and private records database. 

The right risk management software will provide you with a bankruptcy records lookup so you can stay up-to-date on new developments and mitigate the risk of noncompliance. You can view specific details about the bankruptcy records, like the specific type of bankruptcy filing and when it is filed, to help determine whether someone is liable for their debts and maintain compliance with bankruptcy collection regulations. You can also find deceased records to avoid the risk of pursuing an account that is deceased. Whatever records you’re looking to scrub, use risk management tools in a public and private records database for easier risk management and compliance.

Manage risk and increase right-party contact with comprehensive and up-to-date contact information

Communication is a huge part of collections — you need to be able to contact debtors in order to collect on debt. But because communication plays such a huge role, there are certain inherent risks in communication. One risk is that you use inaccurate or outdated contact information and accidentally contact the wrong person. Another risk is that you use a method of contact that is forbidden under specific consumer privacy regulations. To manage risks, you need access to comprehensive, up-to-date contact information for every person you’re trying to get in contact with. 

A public and private records database provides numerous risk management tools for communications. To find an accurate phone number for an individual, you can perform a phone append, which links information about an individual, like a name and address, to their phone number(s), including cell phone numbers and landlines. This reduces your risk of accidentally contacting the wrong person for collections and increases your chances of right-party contact

If an individual doesn’t have a phone number, you can use a reverse phone append, which will take a phone number and provide you with a list of other contact information, like physical addresses, email addresses, and other contacts. When you can access the most accurate and up-to-date contact information, you’ll increase right-party contact and maintain compliance for better risk management.

Ready to see how the risk management tools in a public and private records database can help your collections agency with risk management? Get started with Tracers.