Live from DCS: "Collections is on Route 66 and the Front End of Lending is on the Interstate"

Collections is on Route 66 and the front end of lending is on the Interstate

Skip Strategies and Solutions Session

DCS 2018

September 5, 2018

Austin, Texas

Mike Goins, Head of Recovery and Specialty Collections at TD, kicked off DCS2018’s Skip Tracing session to a packed room by asking for a show of hands of who knew what a Criss Cross guide was? Most raised their hand, while some also acknowledged they didn’t know what that term meant. Mike explained that when he started in collections in the late 80s, that term referred to a reverse phone directory used to find a phone number from an address, a key tool in the skip process when he broke into the industry as a debt collector.

The first panel Skip Operational Strategies – People Locate and Technology started by breaking down the ever-changing definition of a delinquent account that’s classified as a “skip”. Tom Nusspickel, COO at American First Finance appropriately asked, “is it a skip, or a customer who does not want to talk to you?” Everyone agreed “skip” means an account with “no contact”, but now it can also can mean the lender may know the customer location or phone number, or think they know that information, but it’s still classified as a “skip” because the customer is not responding to collection attempts.

Chris Mitcham, SVP of loan servicing at SNAAC broke down the different skip definitions in various account stages from early through late stage, and then Mark Tuggle, Business Process Manager over Loan Servicing at BBVA, accented on the importance of early stage skip tracing once the loan is identified as a skip. Nusspickel stressed the importance of early stage customer contract prior to a payment even being past due, adding the importance of getting verified references. Mitcham said sometimes their collectors get so caught up in looking so many places for data or new information, they forget that many times the simplest and most effective method of resolving a skip account is simply by calling the given phone number.

Mitcham also stated that when he has taken a deep dive at his current and prior companies, “every shop I’ve been at wastes money by buying the same data over and over again”. Tuggle also stated “Skip Tracers” should be rebranded as “Analysts”, as that’s what they’re doing. Mike Goins circled back and correctly said “we’re at a time where customers know how to duck and cover better than ever” when avoiding collection attempts, using technology to block incoming known debt collection phone numbers or going to greater steps to mask their location and personal information.

In terms of solutions, Mitcham suggested reaching out to your customer base to ask their preference of communication to drive more inbound volume, i.e. email, text, phone etc. Tuggle continued by stressing the importance of consolidating skip tools into one platform, defining BBVA’s strategy of using an aggregation system to consolidate and manage many data providers data into one system so all of the consumer public record data needed to locate a skip can be gathered, organized and tracked in one software. Nusspickel pointed out that many collectors are not skilled at the skip process and “if you’re still using collectors to waste time manually gathering data, many times outsourcing this process to a professional skip company makes the most sense.”

The solution Mike Goins asked for a show of hands of who is doing this, and no one raised their hand, is to implement an omni-channel strategy that insures the method of communication to the customer that includes a blend of phone, mail, text, email and other forms of communicating with a strategy that transcends the traditional models of customer contact, especially as it relates to communicating with more challenging customers, i.e. “Skips”, further stating “Collections is on Route 66 and the front end of lending is on the Interstate”. Tuggle added that a recent study stated most delinquent customers preferred email as their preference in regard to how debt collection communicated is handled.

Next up was a Vendor Solution Fast-Track featuring a variety of companies providing skip tools, including many whose data we integrate (Lexis, Experian, Innovis, DRN, Location Services, Transunion/TLO, Carfax) and others who are skip companies using our product to manage their data gathering in one system (DelMar, Location Services and PAR). The interesting thing about this section of the session was one of the skip tracing companies was a no show for their presentation, but no one skip traced them down.

The Asset Location and Repo Strategies panel that was up next dove back into the definition of a “skip”, with all agreeing that the definition of a skip to them is a non-performing account where either the customer is not responding to contact attempts, or their whereabouts is unknown.  This group focused on the technologies used in their repossession strategies, and specifically mentioning the need for all repossessors to have a mobile app that allowed the lender to have real-time insight into the agents status updates, and the agent in turn has real-time access to verify the unit, when spotted, is still past due and should still be repossessed, virtually eliminating wrongful repossessions.

I asked a question that wasn't discussed by the panel; How can the industry improve the quality of the addresses assigned for repo? Rene Strong said before every assignment they place the account in the field with a “door-knock” field contact company to try and collect the payment, or at least to validate the customer and vehicle still live at the address. I thought that was a great answer and it’s how we used to do it when I learned the business at Chrysler Credit in the early 80’s, but in a show of hands, only two companies in the audience said they utilized field contact companies. Miranda Jackson, AVP Vendor Management stated their focus is on skip tracing efficiency to allow higher quality, verified addresses to be sent to the field.

The last panel was Vendor Due Diligence and Oversight with Bev Evancic, SVP in 1st and 3rd party auditing services from Resource Management Services and Marco Villarerreal, Recoveries Operations Manager at Hyundai Capital America. Marco provided a detailed road map into vendor oversight and Bev offered a tip when doing 3rd party audits, “ask for an employee roster in advance …as many times when I show up, there has been as high as a 100% turnover on who is working your portfolio …just since the roster was sent out!”. She also said the side by side meetings she has with collectors on 3rd party audits is a great source of information, and sometimes just visiting the break room is insightful, like the time she saw a “We’re no longer contributing to your 401K” note on the wall in the lunch room, which caused her to look deeper into that companies financials to see why they stopped contributing. In regard to training manuals and most current policies and procedures is also insightful but ask the employee and not the compliance manager. Marco also added that even when a physical site visit is not an option, there is a lot of data that can be requested and validated without visiting the company every year.

The topic then went from compliance to security, and Bev gave an example where at a 3rd party vendor audit, one company causally mentioned that he building maintenance people had access to the room with their servers. That then raised a myriad of questions regarding background checks, permissible purpose to enter the room or not, tracking of entry, cameras, alarms, etc. Does the landlord have access to your 3rd party vendor buildings where PII is accessible?  

I felt this half day session was a great start to getting the debt collection industry together to kick off one of the most insightful conferences our industry, Debt Collections Symposium. Judy and Dennis Hammond and their team do a great job with DCS and CRS, and I know one thing, if I operated a finance company, I would make sure I had Bev Evancic on my team. I’ve sat on the other side of her audits when I owned FindJohnDoe, and she is tough but fair, and she made us better, which is what you want in vendor oversight.