An industry report on debt collectors finds that profits have fallen and competition has grown fierce, resulting in dirty – sometimes illegal – tactics to get consumers to fork over they money they may owe.
There are about 140,000 workers in debt collection, each of which retrieves $245,000. And they are working harder to collect – making more phone calls to get just partial payments.
U.S. Collection agency revenues grew just 3.9 percent to $12.2 billion in 2011, while this year will likely see a slightly better 4.6 percent gain to $12.8 billion, according to a report by Marketdata Enterprises, an independent market researcher.
Some debut collectors resort to illegal or overly aggressive tactics, drawing the attention of state attorneys general, the Federal Trade Commission and the public.
“The bulk of accounts are consumer credit card debt, but this is changing, as more success may lie with medical debt, IRS taxes, utility and cell phone bills,” said Marketdata.
Most agencies do much of their collection on a contingency basis. Rates obtained for retrieving debts vary, but generally average 25 percent to 30 percent Commercial debts are generally larger and have a higher rate of recovery.
For more information about how to handle callers who claim to be debt collectors, see Who’s Calling? That Debt Collector Could Be a Fake.