The Major Characters

Why I wrote this book

The Lingo of Debt Collectors

 Interesting Stats

One Billion Points of Contact

- It is estimated that each year “third-party” debt collectors make one billion contacts with consumers to recover debt.  (See footnote #1 below.)


A Nation of Debtors

- According to the Federal Reserve Bank of New York, some 35 million consumers—roughly 14 percent of Americans—are being hounded by debt collectors over an unpaid bill. (See footnote #2.)

- A recent study by the Urban Institute says the number is even higher.  It estimates that roughly 77 million Americans have a debt in collections.  (You can read the report by clicking here.) 


What explains this difference?  As my colleague, Felix Salmon, explains: “The number of Americans with debt in collections is not an easy figure to define, let alone measure: there’s no central database of such things. Bad debts never really go away, they just get older and harder to collect on. Which means that while it’s pretty easy to get added to the list of Americans with debt in collections, it’s very hard to drop off the list.”  The lower estimates – like the one made by the New York Fed – tend to look only at debt which has been active in the past 3 months or 12 months. But Americans get pestered every day over debt, which is many years old.  The estimate by the Urban Institute includes all debts listed on consumers’ credit reports—not just the recent ones.  So the Urban Institute may be closer to the mark.


How Much Does the Average Consumer Owe?

- On average, these Americans owe a total of $1,458 per person.

- American consumers owe a grand total of $11.28 trillion, of which roughly $831 billion is delinquent or unpaid.  (See footnote #3.)


Enormous Size of the Debt Buying Industry

 -  When debtors stop paying their credit-card bills, the banks regard the balances as assets for 180 days.  Beyond that time, by law, banks can no longer count these debts as assets.  After all, they are of questionable worth.  So banks “charge off” the accounts, taking a loss.  These routine, massive selloffs have created a vast market for unpaid debts—not just credit-card debts but auto loans, medical loans, gym fees, payday loans, overdue cell phone tabs, old utility bills, delinquent book club accounts. The scale is breathtaking.  Between 2006 and 2009, for example, the nation’s top nine debt buyers alone purchased almost 90 million consumer accounts with over $140 billion in so-called “face value.”  (See footnote #4.)


Monitoring Just 2% of Collection Agencies

- In January 2013, the Consumer Financial Protection Bureau began monitoring the nation’s largest 175 collection agencies that made over $10 million in revenue per year.  But one recent projection on the industry estimates that there will be 8,501 debt-collection firms in 2015 in the United States.  In other words, the CFPB is monitoring roughly 2% of the collection agencies that are currently in operation.  (See footnote #5.)


A Huge Problem & A Little Response

-In 2008, the FTC received 78,838 complaints about third-party debt collectors. By 2012, it increased to 102,783.

- Ever since 2006, the Federal Trade Commission (FTC) has ranked “debt collection” as its second biggest source of complaint from consumers, following only “identity theft.” It has done surprisingly little, however, to clean things up. In 2009, when many Americans were being hardest hit by the economic downturn, the FTC received 88,190 complaints about debt collectors; and yet the commission brought a grand total of just one “enforcement action” against a company for debt collection violations. Since then it has done little more. It brought three actions in 2010, and four in 2011, five in 2012, and six in 2013. This is progress, admittedly, but it seems incremental at best.  (See footnote #6.)


Policing Ground Zero – With an Army of Two

- Buffalo is one of the nation’s debt collections meccas and is sometimes even called its capital. More than 5,000 people earn a living as debt collectors in the Buffalo-Niagara Falls metropolitan area. This is more than the number of taxi drivers, bakers, butchers, steelworkers, roofers, crane operators, hotel clerks, and brick masons combined.

- It has fallen almost entirely on the N.Y. Attorney General’s Office to monitor and police the collection agencies in the Buffalo area. This is the responsibility of the A.G.’s field office in Buffalo which as two full time employees devoted to debt collections. As of spring 2013, that office had complied a list of 324 collection agencies that appeared to be troublesome and warranted close policing.  (See footnote #7)



(1) An Analysis of the Consumer Financial Protection Bureau’s Current Debt Collection Complaints November 2013 by ACA International and Ernst & Young.

(2)  According to the New York Fed, the population of the U.S. is 241 million and 14.63% of Americans have a debt in collections.   

(3)  Federal Reserve Bank of New York.

(4)  This comes from a new report from the Center for Responsible Lending.  (Click here to read the report.)

(5)  This information’s comes from the CFPB and from this industry report: IBISWorld, Debt Collection Agencies in the US: Market Research Report, November 2013.

(6)  The Federal Trade Commission

(7)  The New York State Attorney General’s office.