Leveraging Non-Traditional Place of Employment Data for Collections

Merlin Information Services • www.merlindata.com •800-367-6646

Merlin Information Services • www.merlindata.com •800-367-6646

The changing economic times have dictated

modifi cation in collection practices. The decline of the real estate market has led many debt collection agencies to rely less on the proceeds from the sale of real property or home equity loans to satisfy debts, and more on wage garnishment. As such, more and more agencies are relying on place of employment (POE) data to obtain new phone numbers, contact debtors while they are at work, serve legal process, or garnish wages.

An additional side effect of the economic climate pertains to the consumer demographic that is defi ned as “subprime”. This demographic is growing as consumers who traditionally had higher credit scores and were viewed by lenders and creditors as “low risk” have been struck by unemployment, a drop in the value of their home, or declining worth of their stock or retirement portfolio. This, in turn, affects their cash liquidity, ability to service their debts in a timely manner, and negatively affects their credit rating.

By defi nition, subprime refers to an interest rate that is higher than prime lending rates. The subprime classifi cation typically has applied to a segment of the consumer population that, when compared with traditional credit customers, represents a greater challenge to lenders. A high percentage of these consumers’ debts are typically placed with collection agencies and/or have their loans charged off.

The subprime population, also known as the “non-traditional”

consumer, represents a growing demographic. This trend has caused the industry to demand new and different sources of debtor contact information (specifi cally POE) to aid the collection process. Traditional sources of fi nancing are lending less and with greater scrutiny, leading to less activity being reported to the major credit bureaus, leaving collection agencies to turn to other sources of debtor information.

Many small, boutique Credit Reporting Agencies (CRAs) are emerging as alternative sources of POE data. These agencies

service specialty auto fi nance, rent to own businesses, and many of the 22,300 payday loan establishments in the U.S. Consumer data associated with payday loans, installment loans, subprime credit cards, and auto loans are being leveraged to obtain updated debtor contact information.

Waterfall processes are employed within many agencies as a way to manage multiple batch processes. As a single, comprehensive, up-to-date POE data source does not exist, employing a waterfall

process with POE batching is essential. As the record counts associated with many CRA consumer fi les are relatively small, relying on a single POE batch will likely leave many collectors frustrated with the lack of updated debtor information for much of their portfolio.

The basic concept of a waterfall process entails leveraging several sources of POE data. An agency’s fi le is processed via an initial batch, and “hits” are loaded into a dialer or forwarded to the collection fl oor. “Non-hits” are processed via a secondary batch. This methodology may be repeated to include numerous POE batches (usually 3-5). However, to maximize right party contacts (RPCs), an iterative and analytical process should be associated with the waterfall process. In other words, a batch hit is not necessarily synonymous with a right party contact. Running not only the non-hits, but also the “bad” hits through subsequent batch processes will ultimately lead to a higher rate of RPCs. Employing analytics over time will indicate which batch processes should be employed, in what order, and which are producing the greatest return on investment (ROI).

Merlin Information Services relies on several of the smaller CRAs to create one of the industry’s most comprehensive POE batch solutions (i.e. 54 million records). The update frequency of this data varies. In some cases, updates occur daily, but generally the data is refreshed on a monthly basis. A portion of Merlin’s collection customers have opted to introduce a

service specialty auto fi nance,

via a secondary batch. This methodology may be repeated to include numerous POE batches (usually 3-5). However, to maximize right party contacts (RPCs), an iterative and analytical process should be associated with the waterfall process. In other words, a batch hit is not necessarily synonymous with a right party contact. Running not only the non-hits, but also the “bad” hits through subsequent batch processes will ultimately lead to a higher rate of RPCs. Employing analytics over time will indicate which batch processes should

“22,300

payday loan

establishments

in the U.S.”

Merlin Information Services • www.merlindata.com •800-367-6646

single Merlin POE batch as a compliment to an existing waterfall process. Others rely on Merlin to capitalize on all POE data sources and deliver an “outsourced” waterfall process.

Data delivered via Merlin’s POE batches may include debtor name, home address, home phone, alternative phone (e.g. mobile), employer name, employer address, and employer phone.

This data is generally relied upon for two distinct applications, (pre and post-litigation). Pre-

litigation applications focus on contacting the debtor via a POE phone number or a new residential or mobile number obtained from running a POE batch. Post-litigation applications focus on wage garnishment once an agency or collection law fi rm has been awarded a judgment. As the latter application entails serving legal process, an accurate and up-to-date address for the employer’s corporate or payroll offi ce is essential.

Interested in evaluating the quality and breadth of Merlin’s

POE solutions? Contact us today to inquire about running a complimentary POE batch!

If you are already leveraging POE data but are interested in driving up RPC rates, perhaps augmenting or creating a waterfall process is the answer.

To discuss applications and data sources, or to take advantage of a free evaluation, contact Merlin Information Services (sales@merlindata.com or 800-367-6646).

Your debtor fi le

POE BatchVendor 1

POE BatchVendor 2

POE BatchVendor 3

Vendor 1 Results5% hit rate

3% RPC rate

Vendor 3 Results9% hit rate

7% RPC rate

Vendor 2 Results8% hit rate

5% RPC rate

No/Bad Hits No/Bad Hits

Summary: The basic concept of a waterfall process (outlined above) entails leveraging several sources of POE data. “Non-hits” and “bad hits” are processed via additional batch(es). Please note, hit rates and RPC rates will vary as they are based on age, freshness, and accuracy of the debtor fi le.

Waterfal l Process