In addition to behavioral models, collections and account management groups need the ability to implement collections workflow strategies in order to effectively handle and process accounts, particularly when the optimization of resources is a priority. While the behavioral models will effectively evaluate and measure the likelihood that an account will become delinquent or result in a loss, strategies are the specific actions taken, based on the score prediction, as well as other key information that is available when those actions are appropriate. Identifying high-risk accounts, for example, may result in strategies designed to accelerate collections management activity and execute more aggressive actions. On the other hand, identifying low-risk accounts can help determine when to take advantage of cost-saving actions and focus on customer retention programs.  Effective strategies also address how to handle accounts that fall between the high- and low-risk extremes, as well as accounts that fall into special categories such as first payment defaults, recently delinquent accounts and unique customer or product segments. To accommodate lenders with systems that cannot support either behavioral scorecards or strategies, Experian developed the powerful service bureau solution, Portfolio Management Package, which is also referred to as PMP. To use this service, lenders send Experian customer master file data on a daily basis. Experian processes the data through the Portfolio Management Package system which includes calculating Fast Start behavior scores and identifying special handling accounts and electronically delivers the recommended strategies and actions codes within hours. Scoring and strategy parameters can be easily changed, as well as portfolio segmentation, special handling options and scorecard selections. PMP also supports Champion Challenger testing to enable users to learn which strategies are most effective. Comprehensive reports suites provide the critical information needed for lenders to design strategies and evaluate and compare the performance of those strategies.  

  Does the rule list the Red Flags? The Identity Theft Red Flags Rule provides several examples of Red Flags in four separate categories: 1. alerts and notifications recieved from credit reporting agencies and third-party service providers; 2. the presentation of suspicious documents or suspicious identifying information;   3. unusual or suspicious account usage patterns; and 4. notices from a customer, identity theft victim or law enforcement.    

Optimization is a very broad and commonly used term today and the exact interpretation is typically driven by one's industry experience and exposure to modern analytical tools. Webster defines optimize as: "to make as perfect, effective or functional as possible". In the risk/collections world, when we want to optimize our strategies as perfect as technology will allow us, we need to turn to advanced mathematical engineering. More than just scoring and behavioral trending, the most powerful optimization tools leverage all available data and consider business constraints in addition to behavioral propensities for collections efficiency and collections management. A good example of how this can be leveraged in collections is with letter strategies. The cost of mailing letters is often a significant portion of the collections operational budget. After the initial letter required by the Fair Debt Collection Practice Act (FDCPA) has been sent, the question immediately becomes: “What is the best use of lettering dollars to maximize return?” With optimization technology we can leverage historical response data while also considering factors such as the cost of each letter, performance of each letter variation and departmental budget constraints, while weighing the alternatives to determine the best possible action to take for each individual customer. n short, cutting edge mathematical optimization technology answers the question: "Where is the point of diminishing return between collections treatment effectiveness and efficiency / cost?"