The Debt Collection Market and Selected Policy Issues

"When a consumer defaults on a debt, a third-party debt collector often collects the debt obligation rather than the lender to whom the debt is originally owed. The debt collection market helps lenders recoup their losses when a consumer defaults, generally making consumer credit and other related markets more efficient. When lenders can effectively recoup their losses, they may be more willing to lend to consumers at lower initial loan costs, leading to more access to credit for consumers.
 

 The U.S. debt collection market is large, and the debt collection process impacts many American consumers. As of 2019, there are over 7,000 collection agencies in the United States, and the industry’s annual revenue is about $12.7 billion. According to a Consumer Financial Protection Bureau (CFPB) survey, approximately one-third of consumers with a credit bureau file reported being contacted by at least one creditor or debt collector trying to collect on one or more debts in the previous year.
 

 Lenders make contracts with debt collectors to collect their debts, and consumers may not choose the debt collector with whom they engage. Therefore, consumers cannot take their business elsewhere if abuses occur. For this reason, consumer protection laws and regulations may be particularly consequential. According to the CFPB, debt collection is the consumer finance market with the second most complaints, accounting for 21% of the total complaints the agency received in 2019. Consumers’ most common debt collector complaints assert that a debt collector attempted to collect a debt the consumer did not believe was owed (45%), or a consumer received insufficient written notification about a debt (18%)..."
Debt collection 

FTC and Federal, State and Local Law Enforcement Partners Announce Nationwide Crackdown Against Abusive Debt Collectors

"The Federal Trade Commission and other law enforcement authorities around the country announced the first coordinated federal-state enforcement initiative targeting deceptive and abusive debt collection practices. This nationwide crackdown encompasses 30 new law enforcement actions by federal, state, and local law enforcement authorities against collectors who use illegal tactics such as harassing phone calls and false threats of litigation, arrest, and wage garnishment. The cases announced today bring to 115 the total number of actions taken so far this year by the more than 70 law enforcement partners in the Operation Collection Protection initiative..."
Debt colletions

FTC Issues 2010 Fair Debt Collection Practices Report to Congress
"t a time when many consumers are facing debt problems, the Federal Trade Commission has issued its annual report detailing the steps the agency has taken to protect consumers from unfair, deceptive, and abusive debt collection practices and educate the public on the subject. The 32nd Annual Report to Congress on the Fair Debt Collection Practices Act presents, for 2009, an overview of the types of consumer complaints received by the FTC, descriptions of the agency’s debt-collection law enforcement actions, and a summary of its consumer and industry education efforts and research and policy initiatives. The FDCPA prohibits deceptive, unfair, and abusive practices by third-party debt collectors. The FDCPA requires the FTC to submit annual reports to Congress. The Commission vote to issue the report was 4-0. (FTC File No. P104802; the staff contact is Ron Isaac, Bureau of Consumer Protection, 202-326-3231.)

Copies of the report are available from the FTC’s Web site, http://www.ftc.gov, and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.