U.S. Debt Collection Agencies: An Industry Analysis

Table of Contents

• 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.

• 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

• 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.

• 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)

• 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)

• 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)

• 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)

Methodology