How many business people have posted off their invoices for services rendered only for the envelope to be returned to sender marked ‘Not known at this address’ or ‘Gone away’?
The answer, according to Cliff Poole of UK Search, is a growing number.
Writing in CCR Magazine earlier this year, Poole said: ‘The problem of absconding debtors has escalated to such epidemic proportions that almost every creditor, lending company, or organisation providing services in advance of payment is suffering from people disappearing or pretending to disappear to slow down or avoid payments.’
His company is one of a large number, including my own, SJ Collections, offering to trace debtors and so help businesses avoid becoming another fraud statistic. My service operates on a no find, no fee basis.
Everybody is traceable, Poole insists, given sufficient time and reliable information about the debtor. I think that statement is more truthful than ever as people leave traces of the lives online in social media. The Facebook generation will find hiding from their creditors is much harder when you have created an online identity.
Verification is important, when using sources of information such as the three credit reference agencies, landline or mobile phone records, the electoral roll, the Land Registry or Companies House. Online tracing solutions ‘mainly return successful matches if the input data is an exact match to the individual,’ James Syron of Callcredit Information Group wrote in the same edition of the magazine.
Tracking down people is one thing, collecting their debt another – and codes of practice exist to remind people in the collections industry about how to approach that task within the law.
I’m reminded by the blog of Riding investigations that once you find a debtor, the OFT forbids unlawful and unethical methods of debt recovery. Do’s and don’ts include strictures on how and when to make contact.
But contact can be of use in helping a business decide whether it makes commercial sense to pursue a debt. The information used to effect a trace where someone has physically moved might reveal much about their current financial situation (ie. are there any new county court judgments outstanding), if they have a new job or business, or whether they a homeowner or are renting accommodation.
Annual Fraud Indicator
Deliberate avoidance of paying bills is fraud. And the National Fraud Authority annually publishes a figure, the Annual Fraud Indicator (AFI), to show the cost to the economy of fraud loss. For 2013 the figure is £52 billion, according to the compendium of estimates the authority considers in compiling the indicator.
Fraud against businesses amounts to £15.9 billion a year or 0.54% of annual turnover. And, according to a phone survey of bosses at 500 SMEs by GfK NOP, 98% claimed to have measures in place to prevent fraud yet 27% admitted to being victims in the past year.
By the way, measured for the 2013 AFI as part of the £9.1 billion fraud committed against individuals, private rental property fraud was £755 million.
So tracing is one tool for the collections industry in trying to reduce those fraud figures, and it is just one constituent of the SJ Collections toolbox.