U.S. Debt Collection Agencies: An Industry Analysis

Table of Contents

• Discussion of major findings, status of the industry, industry structure, nature of the profession,
• major trends affecting collections agencies, industry receipts: (1987-2007 actual, 2008 & 2009
• est., 2013 forecast) - major competitors' mkt. share, consolidation, collection methods,
• recovery rates, debt buying, effects of the recession, mkt. segments, commercial vs.
• consumer accts., new technologies, latest Census ratios, consumer debt trends/other
• demand indicators, other industry analysts' opinions - highlights of ALL study chapters.

• Definition & characteristics of the business: history & development, Census NAICS codes,
• how services operate, no. of services nationwide/recent consolidation/mergers
• Status Report: Number of agencies in U.S., profitability, growth, no. of workers, effect of
• the recession, etc.
• Findings/opinion of Kaulkin Ginsberg, ACA trade group, Faulkner & Gray (recent surveys,
• discussion of major trends)
• Collection Techniques: discussion of “traditional” collection techniques & how agencies
• operate (letters, phone calls, legal action, use of operatives), what methods work best, current
• recovery rates, contingency fees, ACA data, customer specializations.

• Discussion of major complaints about collection harassment and unethical/illegal practices, privacy issues.
• Recent legislation/fines by FTC and Congress
• Definition and explanation of 1977 Fair Debt Collection Practices Act, history/legislative background
• State actions by NY Attorney General against collection firms
• FTC report on modernization of FDCPA
• Typical types of violations committed by debt collectors

• Industry layoffs continue as industry struggles, placements volume rises but liquidations fall, is this industry recession-proof or even recession-resistant anymore?
• Summary: The growth of consumer debt/trends through 2009: (Federal Reserve, BEA, consulting firms data), delinquencies & charge-off rates, foreclosures
• Bankruptcy trends: personal vs. business, discussion of Chapter 7, 11, 13 types, peak levels and reasons, regional differences, status of current bankruptcy legislation
• Major trends affecting the business - discussion of recent consolidation, increased consumer debt, emergence of the “debt buying mkt.” ($ size, no. of competitors, trade group), outsourcing of collections by end-users, Web-based applications, call center advances, international expansion, status of IRS outsourcing, client consolidation, growth of debt buying market.
• Findings of latest Kaulkin Ginsberg research/reports
• Emerging collection technologies - integration of computer/telecommun. systems, pre-authorized draft printing (leading firms, how service works, software vs. service bureau approaches), skip tracing, predictive dialing, check verification & computer databases.

Tables:

• Consumer credit outstanding and finance rates: 1992-2009
• Ratios of debt payments to family income: 1998 to 2007
• U.S. non-commercial bankruptcies, by type: 1991-2009

• Demand indicators: growth in “placements” value (Amer. Collectors Assn.), limitations of data, opinions, how recession-proof is the business?
• Comparison of industry receipts estimates by: U.S. Census Bureau, Kaulkin Ginsberg, PriceWaterhouseCoopers, Marketdata
• Effects of the recession on collectability and revenues
• Growth of leading companies for 1st 6 months 2009.
• Estimated value of consumer, medical, government, communication markets.
• 2008-2009 performance/growth/rationale, 2013 forecasts: discussion of growth/reasons and contributing factors, opinions of Kaulkin Report, industry competitors, analysts, short and long-term factors affecting demand and growth, weighted sales increase of top 9 competitors.
• Market segments & niches: consumer vs. commercial accounts, estd. share of industry volume
  • Table: Industry receipts (1987-2007 Census), Marketdata estimates/projections for 2008 &
• 2009, 2013 forecasts ($ value, % changes)

• Findings of PriceWaterhouseCoopers study: amounts referred and collected.
• In-depth discussion of government tax debt, possible huge new market represented by IRS outsourcing of collections to outside agencies: tax debt, non-tax debt, child support, Treasury Dept. & other programs status as of FY 2006, actual collections
• Explanation of Treasury Offset Program - FY 2008 results, amounts
• Objections to outsourcing

• Findings of 2008 ACA Benchmarking Survey: expenses as % gross revenues, liquidation percentages, cost per acct., acct. size, collections per employee
• Summary, discussion of: no. of services, annual receipts (20077 vs. 2002), 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 - 1992-2007, key ratios.

Tables:

• Historical summary of collection agency operating ratios: 1998-2003 (ACA surveys)
• Average annual new business, by region: 1998-2003 (ACA surveys)
• New business, by collection agency size: 1998-2003 (ACA surveys)
• Legal format - corporations, partnerships, proprietorships (no. of estabs., receipts, payroll as % receipts, avg. receipts (2002, 1997)
• Concentration ratios: largest 4, 8, 20, 50 firms (no. of estabs., revenues, as % total industry, payroll, no. of workers (2002, 1997)
• Single vs. multi-unit firms: (1, 2, 3-4, 5-9, 10+ facilities) no. of firms, estabs., receipts, avg. receipts, payroll costs (2002, 1997)
• Annual receipts size of FIRMS, measures as above, 11 sales size classes from $100 mill. to under $10,000 (2002, 1997)
• Annual receipts size of individual ESTABLISHMENTS, ratios as above, 11 classes: $10+ mill. to under $10,000 (2002, 1997)
• State analysis: No. of total adjustment & collection services, receipts, avg. receipts per estab., % of national receipts for 50 states (2002, 1992)
• Estabs. & receipts, by major city (1997)
• Repossession services, by state (2002)

(company overview & business description, products, strategies, recent acquisitions, operations, recent developments, financial summary - 1st half 2009 and prior years)

• NCO Financial Systems
• Outsourcing Solutions Inc.
• Encore Capital Group
• Asset Acceptance Capital
• Intellirisk Management Corp.
• Convergent Resources

Tables:

• Largest collection firms, ranked by revenues and no. of collectors: 2008, 2007
• 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)
• 50 largest collection firms, by no. of branch offices: 2005 (First Detroit ranking)

• Name/address/phone/key contacts of credit and collections trade groups, journals, magazines, directories, federal and state agencies, etc.