ACA Study Value of Third Party Debt Collection


The third-party debt collection industry plays an important role in the U.S.economy. The industry employs hundreds of thousands of Americans as collection professionals, who collect on past-due accounts referred to them by various credit grantors, such as credit card issuers, banks, retail stores, hospitals and other health care services, or by Federal, state and local governments. Business purchases of this industry and personal purchases by its owners and workers ripple through the economy, supporting hundreds of thousands more jobs across the country. Further, the industry benefits the economy by recovering billions of dollars in delinquent debt each year that would otherwise go uncollected.

To quantify the value of third-party debt collection to the U.S. economy, ACA International retained PricewaterhouseCoopers LLP to conduct a survey and economic analysis of third-party debt collections.1 The survey, carried out in the spring of 2006, reveals that in 2005 the industry’s collection efforts resulted in $39.3 billion of debt being returned to creditors on a commission basis. The economic benefits of third-party debt collection are significant.

Value to Creditors

The $39.3 billion in debt returned to creditors on a commission basis in 2005 was roughly 2 percent of total consumer credit outstanding and more than 62 percent of new consumer credit issued. It was equivalent to 3.3 percent of total household borrowing in the United States in 2005. In addition, third-party debt collectors are increasingly working with Federal agencies and state and local governments. In fiscal year 2005, the Federal government referred $13.7 billion in delinquent receivables to private collection agencies (PCAs) resulting in collections of $693.5 million; up from $351.3 million in FY 2000.4 In the area of Federal student loans, for example, the $603.1 million that PCAs returned to the Department of Education in fiscal year 2005 represents the average loan aid received by 122,681 college students during the 2004/05 academic year.

Over the last fifteen years, employment in the third-party debt collection industry has more than doubled, from less than 70,000 in 1990 to nearly 150,000 in 2005. We estimate from our economic impact model that the industry’s payroll reached nearly $5 billion in 2005. Including business purchases by the industry and personal purchases by its owners and workers, we estimate the industry directly and indirectly supported 426,700 jobs with a payroll of $15.0 billion in 2005.

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