ACA Study Shows Collection Agencies Recovered $40 Billion in 2007

Debt collection agencies in the U.S. collected $40.4 billion for their clients in 2007, saving the average American household $354, according to the results of a study sponsored by collection industry trade group ACA International and conducted by PricewaterhouseCoopers (PwC).

The study, “Value of Third-Party Debt Collection to the U.S. Economy in 2007: Survey and Analysis,” was based on a nationwide survey of collection agencies. It is a follow-up to the widely-cited 2005 collection industry report also conducted by PwC.

The survey revealed that collection agencies in the U.S. employ more that 216,000 people, including 122,000 collectors. In 1990, the industry counted just 70,000 employees. The study estimated that the industry, through direct employment and indirect economic impact, supported 420,000 American jobs with a payroll of $15.9 billion in 2007.

Private businesses charged off an estimated $152.5 billion in bad debt in 2007, according to the study. The report estimated that collectors successfully returned $40.4 billion to American businesses last year, representing a 20.9 percent reduction in private sector bad debt. The study said that if Americans were forced to pay higher prices due to cover bad debt expenses returned by collectors, the average household would have spent an additional $354 last year.

“What this report shows is what our members have long known – that debt collection companies are an indispensable part of keeping the U.S. economy afloat,” said ACA CEO Gary Rippentrop.

The report also showed the increasing reliance of government entities on private debt collectors. In fiscal year 2006, the federal government referred $17.5 billion in delinquent receivables to private collection agencies resulting in collections of $739.6 million; up from $693.5 million in 2005.

In addition to the $40.4 billion collectors returned to clients in 2007, the study showed that accounts receivable management companies earned some $6 billion in revenues from the collection of purchased debt.

To view the entire study on ACA’s web site, visit http://www.acainternational.org/images/12546/pwc2007-final.pdf.