Those of us involved in debt collections know the value we bring to the U.S. economy. A study released by Ernst & Young in 2012 shows the collection industry returned a net profit of close to $45 billion (after commissions) in 2010.
However, the benefits derived from the industry involve much more than just a positive economic impact.
Beyond recovering past-due debts, there are at least two primary areas in which the industry benefits society: locating criminals and skip tracing.
The techniques for tracking down a wayward debtor also are very valuable to law enforcement agencies. Several vendors in the collection space provide services to the police - with or without a fee.
Suppose you are a detective trying to track down a suspect involved in a crime or a parent delinquent on your child support payments. Several methods are available:
- You could access one of the third-party-compiled databases by searching name and former address or, if available, Social Security number to see if a data vendor has accurate current contact information.
- If the name is reasonably unique (e.g., not “Smith” or “Jones”), you could search by a radius from the last known location, seeing if the suspect has reappeared anywhere else. This same approach can be used for locating relatives or past associates who, if contacted, might provide a lead on the person of interest.
- To build a lead, you could also look at a person’s address history and contact the people currently living at the former address. With some databases, dates can be cross-referenced to see if the person of interest and present resident ever lived at the same point in time at the same address. If an overlap occurred, the likelihood of generating a good lead is greatly enhanced.
- Another investigatory approach that can be used if the detective knows when a person lived at an address in the past is to look up neighbors who also lived around the address at the same time and contact them for potential leads.
- If lease deposits were involved, a search of apartment managers could be conducted to see if any forwarding addresses for lease deposits were provided.
In regular collections, the above processes also are known as a deep skip. While not normally used for small-balance accounts, these robust skip approaches for large-balance accounts are equally applicable for locating individuals who can help a criminal investigation.
Several companies provide these services to law enforcement. One of these companies has a Website that lists some of its major successes, including a case where a child was abducted and while there was a suspect, his whereabouts were unknown. Drawing upon the available skip-tracing resources, the police were able to apprehend the alleged abductor quickly and return the child to her parents.
Another company that provides skip-tracing resources specializes in helping law enforcement by identifying and locating pedophiles and provides an extensive, free service to law enforcement agencies globally.
“No fewer than 109 children have been found as a direct result of [the late Hank] Asher’s help,” according to Ernie Allen, president of the National Center for Missing and Exploited Children.
A major part of the collections life cycle is skip tracing, or locating consumers whom the debt holder cannot reach. Reasons for no contact can include the following:
- The consumer moved and simply forgot to provide his or her new address and/or phone number to the creditor.
- The consumer moved and intentionally did not provide new contact information to the creditor.
- For many reasons, the original creditor may never have collected accurate, complete or full contact information.
- Fraud was perpetrated on the original transaction, with either an innocent consumer being identified with the debt or false data being provided at the time of the transaction.
Dealing with the above circumstances involves the well-known process of skip tracing, or trying to find the consumer’s current address and phone number.
So what is the point of all this? Skip tracing for nonpaying consumers and locating criminals or persons of interest have a lot in common. The cost of building and maintaining these vast and complex databases is considerable.
Making these resources available to law enforcement would be difficult and challenging without the collection industry’s need for these databases, which allow the costs to be spread over a wider base.
To the average consumer, collectors don’t rank high on the list of admired people. However, members of the collection industry are aware that the tools they employ also benefit our society well beyond collecting on delinquent accounts.
Rollin Girulat is the Senior Collections Manager at Experian.