Jan 07, 2019 Philip Burgess
The debt collection industry has been faced with numerous challenges in recent years due to new regulations. These increased restrictions were designed to with the intent of easing the process for debtors, but what has actually transpired is the implementation a more difficult approach for collectors.
However, technology developments coupled with the use of data analytics can help debt collection agencies improve their situations - and make things more easy for the consumer, as well.
Industry reforms have forced debt collectors to change
Thomas J. Miller wrote in an article for Banking Strategies that while the restrictions imposed upon debt collectors may be a hindrance, they were inevitable due to outdated - but extremely prominent - misconceptions of the industry as a bully. He argued that firms today must prioritize compliance with these new requirements in order to understand and navigate them more effectively.
The best way to improve productivity in the debt collection sector is to implement automated systems that can track and analyze debtor information, according to Miller. One of the reasons that prior incarnations of collectors earned such a bad reputation among consumers is that they lacked access to valuable personal data, he said, which in turn forced agencies to increase the volume of calls to any particular debtor in order to gain a better understanding of any progress being made.
Without a data tracking system, innocent citizens can become victimized by inaccurate information. A particularly high-profile example of this occurring was reported by Philadelphia Inquirer contributor Jeff Gelles, involving mistaken identity and persistent harassment by misinformed debt collectors.
A Florida resident named Matthew J. Hartigan has been regularly contacted by debt collection firms and legal representatives, Gelles noted, all of whom were under the false assumption that he was a man with the same name who had been neglecting to pay a multitude of property taxes to Philadelphia for years. Hartigan - the innocent one - has been inundated with calls for over 17 years about settling a debt that doesn't even belong to him.
Hartigan has never even lived near Philadelphia, and Gelles said that the man was only 12 years old when the property on which he allegedly owes taxes was purchased by someone of the same name. While he has managed to keep the collection agencies at bay for the most part, every so often a new representative will contact him, seeking repayment on his debts. Apparently, the message has not been transmitted between each new collector.
Data tracking and analytics can mitigate large-scale mixups
The Hartigan case is an extreme example of the failures of debt collection without intelligent use of software, but it does display the importance of implementing a competent system. Miller said that collectors need to learn more about debtors before they contact them, and this is where technology comes into play. With access a powerful analytics platform that can assess each individual situation objectively, collectors can cultivate and maintain better relationships with borrowers. This, Miller suggested, can lead to increased loyalty and a feeling of security, which can potentially make the process more amicable for both sides.
Debt collectors need to focus on compliance more than ever before, and the use of a complex data analytics system is a good way to ensure that things are operating smoothly and effectively. Understanding debtors has never been more important, but it has also never been more possible, thanks to software that can track and evaluate historical data instantly. Successful collection agencies should consider implementing a powerful platform that can compile and analyze information.