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U.S. Debt Collection Agencies: An Industry Analysis

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  • 145 Pages
  • February 2022
  • Region: United States
  • Marketdata LLC
  • ID: 5533702
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This newly updated bestseller by Marketdata examines the $15 billion business of debt collection agencies. Complaints by consumers about harassment by collectors still exists and tops the list of complaints to the FTC. Federal and state regulations have reduced recovery rates, resulting in slow growth. However, the Covid-19 pandemic really didn’t hurt this business, as consumers used stimulus payments and enhanced unemployment benefits to pay down their debts in 2020.

Collections is a fragmented business of 3,200 mostly small firms. Industry consolidation continues, and the business has become attractive to investors.

Technology such as artificial information is making firms more efficient and skilled collectors are in high demand. Collections is moving off-shore and the outsourced IRS debt market has grown.

The study examines industry revenues/growth, consumer debt trends and industry issues, regulation, extensive operating ratios, etc. Covers national revenues/growth (2002-2017 actual, 2019, 2020, 2021 estimates, 2022 & 2025 forecasts), exhaustive Census data industry operating ratios (national, state, city). The study examines consumer debt trends, bankruptcy trends, the debt buying market, outsourcing, major market segments and more. Competitor profiles for: TransWorld Systems, Encore Capital, The Kaplan Group, Alorica Global Solutions, and Portfolio Recovery Associates. The report contains 46 tables and charts.

FREE with purchase: A "done-for-you" PowerPoint presentation covering the market's characteristics, structure, $ size, growth drivers, forecasts, and key operating metrics.

Table of Contents

Introduction: Report Scope, Sources of Information, Methodology     

Executive Overview of Major Findings 

Discussion of major findings, status of the industry, industry structure, nature of the profession, major trends affecting collections agencies, industry receipts: (2002-2017 actual, 2019-2021 estimated, 2022 & 2025 forecast) - major competitors’ mkt. share, consolidation, collection methods, recovery rates, debt buying, effects of the pandemic, mkt. segments, new technologies, latest Census ratios, consumer debt trends/other demand indicators - highlights of ALL study chapters.

Nature & Status Report of the Industry 
  • Definition & characteristics of the business: history & development, Census NAICS codes, how services operate, no. of services nationwide/recent consolidation/mergers 
  • Status Report: declining no. of agencies in U.S., effects of the pandemic
  • Demand factors
  • Industry trends: profit margins, offshoring, consolidation, adaptive learning systems:     
  • Collection Techniques: discussion of “traditional” collection techniques & how agencies operate (letters, phone calls, legal action, skip tracing, use of operatives), what methods work best, current recovery rates, contingency fees, customer specializations.

Consumer Complaints, Industry Regulation 
  • Discussion of major complaints about collection harassment and unethical/illegal practices, privacy issues.
  • 2020 findings of Consumer Financial Protection Bureau: No. and type of complaints, compared to 2018
  • Industry regulation, by: 1977 Fair Debt Collection Practices Act, Telephone Consumer Protection Act (1991), Fair Credit Reporting Act (1970), Health Insurance Portability and Accountability Act (1996).
  • Regulatory bodies: FTC, FCC, CFPB
  • CFPB Annual Report 2021: Debt Collection Highlights, new rules explained.
  • Table: 2020 no. of consumer complaints by type

Major Industry Trends 
  • Summary: major factors affecting demand for the industry
  • Industry status in 2021: consolidation - declining no. of firms, decline in profits, challenges for various aspects of the business (TransUnion survey data)
  • Summary: Types of consumer debt held by type ($ amount: student loans, medical, credit card, mortgages, auto loans) 
  • 2019 major debt collection trends: compliance, technology, worker skills, company cultures, top 9 collection agency trends for 2019
  • Discussion of: industry & client consolidation, emergence of artificial intelligence, 
  • The Covid-19 pandemic’s impact on debt, by population segment (Millennials, Baby Boomers, Gen X, etc.)
  • Bankruptcy trends: personal vs. business, discussion of Chapter 7, 11, 13 types, peak levels and reasons, regional differences
  • Growth of the debt buying market.
  • Findings of latest Kaulkin Ginsberg research/reports 
  • Emerging collection technologies - integration of computer/telecommun. systems, pre-author- ized draft printing (leading firms, how service works, software vs. service bureau approaches), skip tracing, predictive dialing, check verification & computer databases.

  • Consumer credit outstanding and finance rates: 1998-2021
  • U.S. non-commercial bankruptcies (Chap. 7, 11, 13): 1991-2020.

Industry Size, Growth, Segments & Forecasts 
  • Demand indicators: growth in “placements” value (Amer. Collectors Assn.), limitations of data, opinions, how recession-proof is the business?
  • Sources of data on industry receipts estimates by: U.S. Census Bureau, Kaulkin Ginsberg, ACA, PriceWaterhouseCoopers, IRS, Marketdata 
  • The role of the IRS and use of PCAs (private collection agencies), 2020 $ amount placed
  • Historical industry receipts growth - analysis since early 2000s, Great Recession, aftermath
  • Pandemic’s effect on growth: analysis of 2019-2020
  • 2021 industry performance - analysis, opinions of Marketdata, Kaulkin Ginsberg
  • 2025 forecasts - analysis, opinions of Marketdata, Kaulkin Ginsberg
  • Analysis of commercial vs. consumer accts., 2020 $ estimates
  • Estimated value of consumer, medical, government, commercial markets - 2020

  • Industry receipts (2002-2017 Census), Marketdata estimates/projections for 2019, 2020, 2021 and 2025 forecasts ($ value, % changes)
  • Industry receipts by: consumer, healthcare, gov’t., retail/commercial other accts. (2017)

Industry Economic Structure & Operating Ratios 
  • Summary, discussion of: Census survey data - no. of services, annual receipts, payroll costs, avg. receipts per firm/establishment, legal form of firms, concentration levels for 50 largest firms, single vs. multi-unit operations, services by receipts size of firms & individual estabs., top 10 states (mkt. potential, $ value of receipts), avg. receipts per service, by state
  • 15-year snapshot of the industry - 2002-2017, key ratios.

  • Snapshot of the industry: 2002, 2007, 2012, 2017 - Estabs., receipts, top 50 mkt. share, etc.
  • Payroll as % receipts - 2007, 2012, 2017
  • Sales / payroll employee productivity ratios - 2007, 2012, 2017
  • Average receipts per estab., no. of employees - 2007, 2012, 2017
  • Top 10 states by receipts - 2007 vs. 2019
  • Legal format - corporations, partnerships, proprietorships (no. of estabs., receipts, payroll as % receipts, avg. receipts (2017, 2012, 2007)
  • Concentration ratios: largest 4, 8, 20, 50 firms (no. of estabs., revenues, as % total industry, payroll, no. of workers (2017, 2012, 2007)        
  • Single vs. multi-unit firms (1, 2, 3-4, 5-9, 10+ facilities) no. of firms, estabs., receipts, avg. receipts, payroll costs (2017, 2012, 2007)        
  • Annual receipts size of FIRMS, measures as above, 11 sales size classes from $100 mill. to under $10,000 (2017, 2012, 2007)        
  • Annual receipts size of individual ESTABLISHMENTS, ratios as above, 11 classes: $10+ mill. to under $10,000 (2017, 2012)        
  • State analysis: No. of total adjustment & collection services, receipts, avg. receipts per estab., % of national receipts for 50 states (2019)
  • State analysis: No. of total adjustment & collection services, receipts, avg. receipts per estab., ranked by no. of estabs. (2019)
  • Estabs. & receipts, by major city (2017)

Collection Agency Competitor Profiles                   
(company overview & business description, products, strategies, acquisitions, operations, recent developments, financial summary)
  • Transworld Systems (incl. NCO Group, Altisource) 
  • The Kaplan Group 
  • Encore Capital Group (incl. Midland Credit Management)
  • Portfolio Recovery Associates 
  • Alorica Global Solutions (incl. Expert Global Solutions)

  • Largest collection firms, ranked by revenues: 2007, 2008, 2009, 2010, 2011
  • Top debt buyer companies, ranked by 2008 & 2007 revenues
  • 50 largest firms, by collection agency placements: 2005 (First Detroit ranking)
  • 50 largest collection agencies, by revenues: 2005 (First Detroit ranking)

Reference Directory of Industry Information Sources      
  • Name/address/phone/key contacts of credit and collections trade groups, journals, magazines, directories, federal and state agencies, etc.                

Companies Mentioned

  • Transworld Systems (incl. NCO Group, Altisource) 
  • The Kaplan Group 
  • Encore Capital Group (incl. Midland Credit Management)
  • Portfolio Recovery Associates 
  • Alorica Global Solutions (incl. Expert Global Solutions)