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FTC Study Shines a Light on the Debt Buying Industry, Finds Consumers Would Benefit from Use of Better Data in Debt Collection

News release: “The Federal Trade Commission today announced the results of the first empirical study of debt buyers – companies that are in the business of buying consumer debts and trying to collect on them. As the Commission has found in its prior work, debt collectors who have insufficient information may approach the wrong consumers, try to collect the wrong amount, or both. The report, titled The Structure and Practices of the Debt Buying Industry, found there is room for improvement in the information debt buyers have when they contact consumers and try to collect. The study analyzed more than 5,000 portfolios of consumer debt containing nearly 90 million consumer accounts with a face value of $143 billion. By dollar amount, most of the debt studied (71 percent) was credit card debt, but the study also included mortgage, medical, utility, telecommunications, and other consumer debt. The study evaluated the types of information debt buyers received from creditors both at and after the time of purchase, as well as the contracts governing the relationship between debt buyers and creditors.”

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