Managing Risk — and Protecting Your Bottom Line — With Smarter Segmentation

Peter Ghiselli
Blog Post09/28/2018

As part of a four-part blog series on best practices for third-party collections, we’re 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 this third post, we tell you how to use segmentation to manage risk.

Debt collectors are struggling to stay out of the legal crosshairs of various regulatory agencies — and many are being hit hard with violations, fines and disputes. In most cases, it’s not willful noncompliance that’s causing the problem. Instead, organizations don’t have a clear picture of the consumers in their debt portfolios, and they lack the visibility to pinpoint accounts that fall under statutory protections — requiring special attention. Adding to the complexity, the average consumer’s portfolio is in flux, so collectors need to understand in near real time when special situations arise.

To avoid noncompliance issues, you should segment your inventory for the same reason you separate your colors from your whites when you do the laundry. Just as one red sock can ruin a load of whites, noncompliance issues can hurt your bottom line and reputation. The segmentation process takes an extra step, but in the long run it saves you time, money and headaches — so it’s something you shouldn’t skip.

Here are three special situations where segmentation is a must to mitigate your exposure:

#1. Bankruptcy

State and federal laws prohibit you from contacting consumers involved in active bankruptcy proceedings. Do it and you could be subject to penalties and lawsuits. Ensure those risky accounts are flagged and removed from the dialer by scrubbing your inventory against a robust bankruptcy database. Add a thorough monitoring program to ensure you’re the first to know when changes to a consumers’ debt portfolio occur so you can respond accordingly.

#2. Active military

Enacted to guard military service members and their families when financial hardship strikes, the Servicemembers Civil Relief Act (SCRA) makes collecting debt from active duty men and women challenging. The legislation is complex and violators face stiff penalties. As the Consumer Financial Protection Bureau (CFPB) continues to widen its SCRA enforcement, you need access to reliable data to quickly identify and segment this group.

#3. Phone verification

Each negligent Telephone Consumer Protection Act (TCPA) violation can cost you $500. Commit one willfully, and it will set you back $1,500. While those aren’t backbreaking figures, they can add up quickly, and both your reputation and bottom line can take a hit.

Remain TCPA compliant by adopting a segmentation solution that confirms carrier information, line type and ownership of a given phone number. You’ll be able to quickly and efficiently remove risky phone numbers from your auto-dialing and text message systems and identify suspended or cancelled numbers during the segmentation process.

Take the next step: Make smarter decisions with best-in-class insights

To avoid compliance violations, you need a segmentation solution that offers batch capabilities and high-quality data and analytics that allow you to make faster, more informed decisions. And when changes occur, you need the insight to adjust your strategy in real time.

TransUnion’s segmentation services provide all that, allowing you to leave unique consumer groups in — or out — of your active inventory. Plus, you’ll receive automatic alerts when changes occur so you can rest assured that you’re remaining complaint.

Take the first step now: Complete the form below to schedule a complimentary analysis and let TransUnion help you determine if portfolio monitoring can maximize your recovery efforts.

 

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