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Industry Research and Statistics

ACA has compiled research and statistics from a variety of industry sources in response to frequent questions regarding the credit and collection industry. All sources are cited and every effort has been made to ensure that the information is correct.

The U.S. economy is built on the premise that those who provide credit, goods and services have the expectation of being repaid.

Recovery of consumer debt by third-party debt collectors on behalf of America’s public, private and nonprofit sectors has significant effects on our nation’s economic health.

Third-party debt collectors are engaged in their local communities as valued civic leaders, employers, volunteers, philanthropists and taxpayers.

To measure the annual impacts of third-party debt collection on the national and state economies, ACA International commissioned global advisory firm Ernst & Young to conduct a survey in the spring of 2014.

Complete 2013 Survey Report

Complete 2011 Survey Report

Impact of Third-Party Debt Collection on the National and State Economies from ACA International on Vimeo.

ACA International provides valuable statistical information about the credit and collection industry in the Agency Benchmarking Survey and Top Collection Markets Survey. Below are links to the most recent version of each survey.

Agency Benchmarking Survey
Organized by agency size (volume of new business), the survey enables you to evaluate your company based on national averages and median numbers.

Purchase:

View past editions for free:

Top Collection Markets Survey
Broken out by both market category (credit cards, student loans, healthcare, etc.) and service type (primary, secondary, purchased, legal, etc.), this survey provides vital statistics and key figures.
 

Facts and statistics about bankruptcy

  • In medieval Italy, when a businessman did not pay his debts, it was the practice to destroy his trading bench. From the Italian word for broken bank, "banca rotta," comes the term bankruptcy. (Source: BankruptcyData.com.)

  • Bankruptcy filings in the federal courts fell 12.2 % in 2013. During the 12-month period ending Dec. 31, 2013, 1,071,699 bankruptcy cases were filed, down from 1,261,140 cases in 2012. (Source: Administrative Office of the U.S. Courts.)

  • Chapter 7 and chapter 11 bankruptcies both declined, 13.8% for chapter 7 and 9.7% for chapter 11 in 2013. There were 9,564 chapter 11 filings in 2013, compared to 10,597 in 2012, and 753,995 filings under chapter 7, compared to 874,337 in 2012. (Source: Administrative Office of the U.S. Courts.)

  • A historic high in the number of bankruptcy filings was seen in 2005, when almost 2 million, to be exact 1,782,643 bankruptcies were filed. Although filings dropped in 2006 37.6 % annually and again between 2006 and 2007 declines with 28.0%, they grew steadily between 2008-2010 before decreasing in 2011, 2012 and 2013. (Source: Administrative Office of the U.S. Courts.)

  • Lehman Brothers Holding Co. is the largest business to file bankruptcy, with $691 billion in pre–bankruptcy assets. Washington Mutual was the second largest, with more than $327.9 billion in pre–bankruptcy assets. Both filed for bankruptcy in 2008. (Source: BankruptcyData.com.)

  • Bankruptcy stays on an individual’s credit report for seven to 10 years, depending on the type of bankruptcy filed. Obtaining credit after a bankruptcy can be difficult and expensive. (Source: CBM Credit Education Foundation.)

  • The number of paper checks paid in 2012 is estimated to have been 18.3 billion for a total value of $26 trillion.  (Source: The 2013 Federal Reserve Payments Study, December 2013.)

  • Consumer bill payments were the single largest use of checks in the United States, but the estimated number of these checks declined by more than 1 billion from 2009 to 2012 (Source: The 2013 Federal Reserve Payments Study, December 2013.)

  • The number of electronic payment transactions continues to surpass the number of check transactions. By 2012, about two-thirds of consumer and business payments were made with payment cards, and the share of card payments by number has been growing. Cards increased their share from 43 percent of all noncash payments in 2003 to 67 percent in 2012, while the use of ACH grew more modestly, increasing from a share of 11 percent in 2003 to 18 percent in 2012. Checks represented nearly half (46 percent) of all noncash payments in 2003, but only 15 percent in 2012. (Source: The 2013 Federal Reserve Payments Study, December 2013.)

  • The average value per check paid increased from $1,291 in 2009 to $1,420 in 2012. (Source: The 2013 Federal Reserve Payments Study, December 2013.)

  • There was a 9.2 percent annual decline in the number of checks paid from 2009 to 2012, while the value of checks paid declined 6.3 percent per year during the same period. Some consumer checks were converted to ACH transactions by billers and merchants. Therefore, the estimated number of checks paid differed from the estimated number of checks written. The share of checks written that were converted to ACH increased from 12 percent by number in 2009 to 13 percent in 2012. (Source: The 2013 Federal Reserve Payments Study, December 2013.)

  • The average NSF (nonsufficient funds fee) charged by a bank is $32.20. (SourceBankrate.com Bankrate’s 2013 Checking Study.)

  • Direct deposit continues to deliver a critical piece of network volume. Direct deposit payments increased 5.4 percent over the 2012 volume. (Source: NACHA press release, "ACH Volume Grows to Nearly 22 Billion Payments in 2013," April 7, 2014.)

  • There were nearly 22 billion ACH payments in 2013—a 4 percent increase over 2012.  (Source: NACHA press release, "ACH Volume Grows to Nearly 22 Billion Payments in 2013," April 7, 2014.)

Facts and statistics about child support

  • During fiscal year 2011, child support payments of nearly $27.3 billion were collected for 17.3 million children in its caseload. In FY 2011, total administrative expenditures were $ 5.7 billion, a two percent decrease from the previous year. (Source: Administration for Children & Families Office of Child Support Enforcement FY2011 Annual Report to Congress.)

  • In tax year 2011, the Federal Parent Locater Service collected $3.7 billion in past-due child support. Approximately $463 million in child support was paid through income withholdings sent from state Child Support Enforcement agencies to employers. The Federal Offset Program, using the Child Support Debtor File collected $ 2.3 billion in past-due child support. (Source: Administration for Children & Families Office of Child Support Enforcement FY2011 Annual Report to Congress.)

  • In 2011, 43.4 percent of custodial parents received the full amount of child support owed them. About three-quarters (74.1 percent of custodial parents received full or partial payments. (Source: Census Bureau, "Custodial Mothers and Fathers and their Child Support: 2011," released October 2013.)

  • In 2011, about $37.9 billion (or 62.3 percent) in child support due was reported as received. That equals an average of $3,770 per custodial parent requiring a child support payment. (Source: Census Bureau, "Custodial Mothers and Fathers and their Child Support: 2011," released October 2013.)

  • About half (48.9 percent) of all custodial parents had either legal or informal child support agreements; and custodial mothers were more likely to have agreements (53.4 percent) than custodial fathers (28.8 percent.) (Source: Census Bureau, "Custodial Mothers and Fathers and their Child Support: 2011," released October 2013.)

  • In 2011, the 6.3 million custodial parents who were due child support under the terms of legal awards or informal agreements were due an annual average of $6,050, or approximately $500 per month. (Source: Census Bureau, "Custodial Mothers and Fathers and their Child Support: 2011," released October 2013.)

  • Child support arrears represents the amount of child support that remains unpaid. It is owed either to the custodial family or the government. The child support program has experienced a major change in who is owed child support arrears. In September 2002, 
    total certified arrears stood at $66 billion and 51 percent of that was owed to the government. By November 2013, total certified arrears stood at $113 billion and 26 percent of that was owed to the government. (Source: Administration for Children & Families Report, The Story Behind the Numbers, March 2014.)

  • The U.S. 4th Circuit Court of Appeals ruled in 1994 that because the collection of child support results from a court order and not a consumer transaction, it does not fall under the Fair Debt Collection Practices Act. (Source: Mabe v. GC Services, 32 F. 3d. 86.)

Facts and statistics about third-party debt collection.

  • In 2013, agencies recovered approximately $55.2 billion in total debt, on which they earned close to $10.4 billion in commissions and fees. Removing these agency earnings from the total debt recovered leaves nearly $44.9 billion in debt that agencies returned to creditors. The five states with the highest total debt collected are New York ($5.4 billion), Texas ($4.9 billion), California ($4.6 billion), Illinois ($2.9 billion) and Florida ($2.7 billion). (Source: The Impact of Third-Party Debt Collection on the National and State Economies, July 2014.)
  • The collection industry saved the average American household $389 in 2013. This amount represents dollars households would have spent if businesses were forced to raise prices to cover bad debt. (Source: The Impact of Third-Party Debt Collection on the National and State Economies, July 2014.)
  • U.S. collection agencies directly employ approximately 136,100 people in debt collection agencies and support the indirect and induced employment of more than 95,100 individuals in industries that sell goods and services to debt collection agencies and their employees in 2013. Considering both the direct and indirect economic impacts of the debt collection industry, the total employment impact on the U.S. is nearly 231,300 jobs with a total payroll impact of $12.4 billion. (Source: The Impact of Third-Party Debt Collection on the National and State Economies, July 2014.)
  • Job growth for bill and account collectors is expected to be 15 percent by 2022. There were approximately 397,000 bill and account collectors employed in the United States in 2012, and projected employment for the industry is more than 455,000 by 2022. (Source: 2014/15 Bureau of Labor Statistics’ Occupational Outlook Handbook.)
  • Based on an annual payroll of $4.7 billion and 130,200 paid employees, earnings for all debt collection agency employees (including telephone collectors and other employees) average approximately $36,022. (Source: The Impact of Third-Party Debt Collection on the National and State Economies, July 2014.)
  • Third-party debt collection agencies made more than $130.6 million in charitable contributions in 2013. Industry employees spent approximately 1.9 million hours volunteering for causes/activities of their choosing, including nearly 571,600 hours at company sponsored volunteer activities. (Source: The Impact of Third-Party Debt Collection on the National and State Economies, July 2014.)
  • U.S. debt collection agencies were estimated to directly contribute $724 million of federal tax, $400 million of state tax, and $287 million of local tax, for a combined tax impact of more than $1.4 billion. Taxes attributable to the operations of debt collection agencies employees, suppliers, and businesses that sell to employees total over $2.6 billion--approximately 10 percent of the estimated total economic impact of the debt collection industry. Of the $2.6 billion estimated total tax impact, 51 percent is estimated to be federal tax (corporate and individual income taxes) and 49 percent is estimated to be state and local taxes. (Source: The Impact of Third-Party Debt Collection on the National and State Economies, July 2014.)
  • The Fair Debt Collection Practices Act, the primary federal law regulating third-party collection agencies, was enacted in 1977 with the support of ACA to protect consumers from unfair and abusive collection practices. (Source: A Guide to the Fair Debt Collection Practices Act.)
  • Approximately 69 percent of collectors are female, while about 28 percent are male. (Source: 2012 Benchmarking & Agency Operations Survey, ACA International, March 2012.)
  • Annual compensation (including base salary and commissions) for a full-time collector averages $38,000. (Source: ACA’s 2013 Compensation & Benefits Survey, March 2013.)

Frequently asked questions about the debt collection industry.

What is a professional debt collection service?
Third-party collection services collect on past-due accounts referred to them by various credit grantors, such as credit card issuers, banks, car dealers, retail stores or health care facilities—any business that extends credit or offers payment installment plans.

What does a typical professional collection office do?
Often creditors cannot locate consumers who have moved or changed their phone numbers. The first thing a collection service must do is obtain the consumer’s current address or phone number through a process called skiptracing. The collection office then sends the consumer a notice that allows him or her to dispute the validity of the debt and/or request verification of the debt. Once the notice is received, a collector may call or write to the consumer and ask for full payment of the debt. If payment in full is not possible, the collector helps the consumer make arrangements to solve the problem.

Why are accounts referred for collection?
Most accounts are referred for collection because they have gone unpaid for several months and the creditor has not received communication from the consumer. Third-party collection services, which use specialized phone systems, computers and software designed specifically for the collection industry, often are more effective than creditors at collecting payment on such delinquent accounts.

What is the difference between "in-house" collections and third-party collections?
Third-party collectors are directly regulated by the Fair Debt Collection Practices Act (FDCPA), which is administered by the Federal Trade Commission (FTC). The FDCPA sets forth strict guidelines designed to protect consumers from abusive, misleading and unfair debt collection practices. In-house collectors are credit grantors and are covered by the FDCPA only under certain circumstances.

Is there a typical debtor?
No. People from all walks of life face financial problems. These problems can stem from poor money management and budgeting skills, the loss of a job, prolonged ill health or a multitude of other unforeseen circumstances.

What should people do if they receive a collection notice?
First, stay calm. Just as consumers depend on an income to pay their living expenses, the people who sell goods or services on credit depend on your payment to meet their own expenses. Remember, by the time your account has been turned over to a collection specialist, the creditor has probably carried the account for several months. Second, work with the collection agency to resolve the problem before it gets worse.

What can’t a collector do when contacting a consumer?
Under the FDCPA, third-party collectors may not: make repetitive or excessively frequent phone calls to annoy or harass you; misrepresent his or her identity; threaten to take any action that is illegal or that the debt collector does not actually intend to take.

Why do we need collection agencies?
Most accounts are referred for collection because they have gone unpaid for several months. Without the quick actions of collection services, unpaid debt is often reflected by higher consumer prices. Since there is a limit on how high prices can be increased before businesses begin losing customers, bad debt also results in business failure and job loss.
 
How has the collection industry changed over the past 15 years?
In addition to more thorough training for collectors, the greatest changes in the collection industry have resulted from significant increase in automation. Fifteen years ago, most collection offices kept track of accounts on paper cards; information was recorded manually and collectors dialed their telephones themselves. Today, offices are computerized, use collection-specific software and have sophisticated telephone systems with automated dialers.

How is the collection industry likely to change in the next 15 years?
Collection businesses will likely offer a wider variety of client services, including an increased capacity for greater billing and accounts receivable management and increased "early out" or pre-collection services. Many agencies are expanding existing services and technology beyond the traditional contingency collection functions.

Facts and statistics about government collections

  • The U.S. Department of Education, the Department of Health and Human Services and Department of Treasury’s Bureau of Financial Management Service have each established contracts with private collection agencies to collect non-tax debts owed to the Federal Government. (Source: Department of Treasury Fiscal Year 2011 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • PCAs assist federal agencies in many ways, including establishing repayment agreements and resolving debts administratively by determining that a debtor is deceased, disabled, bankrupt, or out of business (Source: Department of Treasury Fiscal Year 2011 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • In fiscal year 2012, PCAs under contract with the departments of Education, HHS and Treasury had referrals in delinquent federal debt. Treasury private collection agencies (PCAs) collected $81.4 million a decrease of $6.5 million (7.4%) from FY 2011. Federal creditor agencies referred 7,109 cases totaling $13.1 billion to DOJ for enforced collection. (Source: Department of Treasury Fiscal Year 2012 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • The Department of Education contracts with PCAs to assist in collecting defaulted student loan debts. In fiscal year 2012, the department’s PCAs collected $2.9 billion, an increase of 11.3% over fiscal year 2011. (Source: Department of Treasury Fiscal Year 2012 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • Health and Human Services Program Support Center (PSC) contracts with a PCA to collect delinquent debts. PSC’s PCA collected $1.7 million, a decrease of $1.2 million or 41.4% from FY 2011. (Source: Department of Treasury Fiscal Year 2012 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • The U.S. Department of Education relies heavily on private collection agencies and refers every eligible debt as quickly as possible to one of its PCAs. In fiscal year 2012, delinquent education debt collection totaled $13.1 billion, an increase of $1.1 billion or 9% from FY 2011. (Source: Department of Treasury Fiscal Year 2012 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • Forty-three states, the majority of federal agencies and thousands of cities and counties have used PCAs for the collection of delinquent taxes and other receivables. (Source: ACA International research.)

Facts and statistics about healthcare debt and collections.

Average Recovery Rates

  • Hospitals – 15.3 percent. (Source: ACA International’s Top Collection Markets Survey*, Jan. 1 – Dec. 31, 2013.)
  • Non-hospitals – 21.8 percent. (Source: ACA International’s Top Collection Markets Survey, Jan. 1 – Dec. 31, 2013.)

Uncompensated Care/Bad Debt

  • U.S. hospitals provided $45.9 billion in uncompensated care in 2012, representing 6.1 percent of annual hospital expenses.(Source: American Hospital Association, “Uncompensated Hospital Care Cost Fact Sheet,” January 2014.)
  • U.S. hospitals reported that 5.93 percent of their total second quarter 2014 gross revenue was written off as charity care or bad debt, compared to 5.09 percent in the first quarter of 2014. Of the 5.93 percent written off as uncollectible, 3.03 percent was for bad debt and 2.90 percent was for charity care expenses. Uncollectible write-offs among Southeast, Southwest, and Midwest hospitals swelled past the benchmark in second quarter 2014, and significantly so for Midwest and Southeast hospitals. Midwest hospitals reported the highest level of uncollectible write-offs by region, at 11.40 percent of total gross revenue, or more than double the 4.73 percent of total gross revenue written off as uncollectible in the first quarter. (Source: The Hospital Accounts Report Analysis on Second Quarter 2014.)

Uninsured/Underinsured

  • In the first three months of 2014, 41 million people of all ages (13.1 percent) were uninsured and 55.5 million (17.8 percent) were uninsured for at least part of the year. Nearly 30 million people (9.6 percent) were uninsured for more than a year. (Source: National Health Interview Survey from the Centers for Disease Control and Prevention and National Center for Health Statistics: September 2014.)
  • In the first three months of 2014, among people ages 18-64, 18.4 percent were uninsured, 17.1 percent had public health plan coverage and 65.6 percent had private health insurance coverage. (Source: National Health Interview Survey from the Centers for Disease Control and Prevention and National Center for Health Statistics: September 2014.)
  • Among adults ages 18-64, the percentage who were uninsured decreased from 20.4 percent in 2013 to 18.4 percent in the first three months of 2014. (Source: National Health Interview Survey from the Centers for Disease Control and Prevention and National Center for Health Statistics: September 2014.)
  • Among adults ages 19-25 the percentage who were uninsured decreased from 26.5 percent in 2013 to 20.9 percent in the first three months of 2014. (Source: National Health Interview Survey from the Centers for Disease Control and Prevention and National Center for Health Statistics: September 2014.)
  • The percentage of people with health insurance for all or part of 2013 was 86.6 percent and 13.4 percent did not have health insurance for the entire year. (Source: The U.S. Census Bureau Current Population Survey on the number of people with health insurance in 2013: September 2014.)
  • Full-time, year-round workers were more likely to be covered by health insurance (86.1 percent) than those who worked less than full-time, year round (76.0 percent) or non-workers (77.6 percent). (Source: The U.S. Census Bureau Current Population Survey on the number of people with health insurance in 2013: September 2014.)
  • In 2013, the majority of individuals (64.2 percent) were covered by private health insurance. The largest single type of health insurance in 2013 was employment-based health insurance, which covered 53.9 percent of the population. (Source: The U.S. Census Bureau Current Population Survey on the number of people with health insurance in 2013: September 2014.)
  • In 2013, 34.3 percent of the population was covered by government health insurance. The percentage of people covered by Medicaid in 2013 was 17.3 percent and the percentage covered by Medicare was 15.6 percent. (Source: The U.S. Census Bureau Current Population Survey on the number of people with health insurance in 2013: September 2014.)
  • As of 2012, 75 million people reported problems paying their medical bills or were paying off medical debt, up from 73 million in 2010 and 58 million in 2005. An estimated 48 million people were paying off medical debt in 2012, up from 44 million in 2010 and 37 million in 2006 (Source: Press Release, The Commonwealth Fund.)
  • The number of Americans under age 65 who did not have insurance at the time of interview in 2013 was 44.8 million, 39.6 million for ages 18-64 and 4.8 million for children under age 18. (Source: Centers for Disease Control and Prevention Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, January-June 2013.)  

Premiums

  • In 2013, annual premiums for families covered by employer-sponsored health insurance were $16,351 and $5,884 for individuals. Family premiums rose 4 percent since 2012. Over the last 10 years, the average premium for family coverage has increased 80 percent. (Source: the 2013 Employer Health Benefits survey, the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), January-May 2013.)

Deductibles

  • The percentage of covered workers enrolled in a plan with a general annual deductible increased to 78 percent in 2013.  More than half (58 percent) of covered workers at small firms with 3 to 199 employees now have a deductible of $1,000 or more. (Source: the 2013 Employer Health Benefits survey, the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), January-May 2013.)

Cost of Care

  • In 2012, 41 percent of adults (ages 19-64) reported that they had medical debt or trouble paying medical bills. Of those who reported difficulties paying medical bills or paying off medical debt, 42 percent (32 million people) said they received a lower credit rating as result of unpaid medical bills. (Source: The Commonwealth Fund Biennial Health Insurance Survey 2012, April 2013.)
  • For individuals with greater levels of obesity, lifetime medical costs are higher, ranging from $15,000 to $29,000 more than for normal weight individuals. (Source: RTI International and Merck & Co., May 29, 2008.)

Electronic Medical Records

  • Although U.S. primary care doctors’ use of electonic medical records increased from 46 percent in 2009 to 69 percent in 2012, the U.S. lags far behind other leading countries, where more than 90 percent of doctors use electronic records. (Source: Press Release, The Commonwealth Fund, November 15, 2012.)

Access to Care

  • In 2012, 43 percent of adults, or 80 million people, said they had skipped or delayed getting needed healthcare or filling prescriptions because of the cost. This is an increase from 75 million people who reported such problems in 2010, and 64 million in 2005. More than a quarter (28 percent) of adults with a chronic health condition said they had skipped doses or not filled a prescription for their health condition because of the cost. (Source: The Commonwealth Fund Biennial Health Insurance Survey 2012, April 2013.)

Enrollment in Health Plans

  • Enrollment in consumer-directed health plans rose 15 percent in 2013 to 45 million covered workers, up from 39 million workers in 2012. (Source: American Association of Preferred Provider Organizations Survey of Consumer-Directed Health Plans 2013, June 10, 2014.)
  • Fifty-seven percent of covered workers are enrolled in PPO plans, which are the most common type. Twenty percent of covered workers are enrolled in an HDHP/SO plan, 14 percent have an HMO and 9 percent are enrolled in a POS plan. Enrollment in HDHP/SOs increased significantly between 2009 and 2011, from 8 percent to 17 percent of covered workers, but has plateaued since then. Enrollment distribution varies by firm size, for example, PPOs are relatively more popular for covered workers at large firms (200 or more workers) than smaller firms (62 percent vs. 47 percent)  and POS plans are relatively more popular among smaller firms than large firms (16 percent vs. 5 percent). (Source: The 2013 Employer Health Benefits Survey, the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), August 2013.)

Healthcare Spending

  • Healthcare spending in the United States grew 3.7 percent in 2012, to $2.8 trillion, or $8,915 per person. 2012 marked the fourth consecutive year of slow growth in healthcare spending. The share of the economy devoted to health spending decreased from 17.3 percent in 2011 to 17.2 percent in 2012, as the Gross Domestic Product increased nearly one 
    percentage point faster than healthcare spending at 4.6 percent. (Source: Centers for Medicare and Medicaid Services, National Health Expenditures 2012 Highlights.)

Facts and statistics regarding identity theft and fraud

  • Fraud is a broad area of crime encompassing everything from forging a signature on a check to filing a false insurance claim. Identity theft is a specific form of fraud that occurs when an imposter obtains key pieces of personal information about a consumer—such as a Social Security or a driver’s license number—and uses that information to impersonate the consumer by obtaining credit, merchandise or services in the name of the victim. (Source: "Identifying Your Role," ACA International Compliance Dept., Collector magazine, November 2006.)
  • The terms "identity fraud" and "identity theft" are often used interchangeably, but there are important distinctions between the two. "Identity fraud is defined as the unauthorized use of another person’s personal information to achieve illicit financial gain. Identity fraud can range from simply using a stolen payment card account, to making a fraudulent purchase, to taking control of existing accounts," according to Javelin Strategy & Research. For example, if someone steals your credit card and makes purchases, you have been the victim of identity fraud. Conversely, identity theft occurs when personal information is accessed by someone else without permission. For example, if somone found your Social Security number on a document in your trash and applied for a new credit card in your name and used it, you have been the victim of identity theft. (Sources: "Identifying Your Role," ACA International Compliance Dept., Collector magazine, November 2006; "2015 Identity Fraud Study," Javelin Strategy & Research, March 2015.)
  • A 2015 Javelin Strategy and Research report found that 12.7 million people were victims of identity fraud in the United States during the past year, which is one victim every 2 seconds. As a result, $16 billion was stolen from consumers. (Source: "2015 Identity Fraud Report," Javelin Strategy & Research, March 2015.)
  • Two-thirds of identity fraud victims in 2014 had previously received a data breach notification in the same year. (Source: "2015 Identity Fraud Report," Javelin Strategy & Research, March 2015)
  • The Federal Trade Commission reported receiving more than 330,000 identity theft complaints from consumers, making it the top complaint for the 15th consecutive year. (Source: FTC 2014 Consumer Sentinel Network Data Book," February 2015.)
  • The most common form of reported identity theft was government documents/benefits fraud (39 percent) in 2014, followed by credit card fraud (17 percent), phone or utilities fraud (13 percent), and bank fraud (8 percent). Other significant categories of identity theft reported by victims were employment-related fraud (5 percent) and loan fraud (24percent.) (Source: Consumer Sentinel Network Data Book January-December 2014 for the Federal Trade Commission, February 2015.)
  • More than half of identity theft victims who were able to resolve any associated problems did so in a day or less; among victims who had personal information used for fraudulent purposes, 29 percent spent a month or more resolving problems.(Source: Bureau of Justice Statistics: Victims of Identity Theft, 2012.)
  • Direct and indirect losses from identity theft totaled $24.7 billion in 2012. (Source: Bureau of Justice Statistics: Victims of Identity Theft, 2012.)
  • In 2012, the unauthorized misuse or attempted misuse of an existing account was the most common type of identity theft, experienced by 15.3 million persons age 16 or older (6 percent of all persons.) The majority of victims experienced the fraudulent use of their credit cards (7.7 million or 3 percent of all persons) or bank accounts (7.5 million or 3 percent of all persons). Another 1.7 million victims (0.7% of all persons) experienced other types of existing account theft, such as misuse or attempted misuse of an existing telephone, online, or insurance account. (Source: Bureau of Justice Statistics: Victims of Identity Theft, 2012.)
  • The way victims discovered that their identifying information was misused varied by the type of identity theft. Among victims who experienced the unauthorized use of an existing account, 45 percent discovered the identity theft when a financial institution contacted them about suspicious activity on their account. In comparison, 15 percent of victims who experienced the misuse of personal information to open a new account or for other fraudulent purposes discovered the incident when a financial institution contacted them. (Source: Bureau of Justice Statistics: Victims of Identity Theft, 2012.)

The credit and collection industry is subject to stringent security regulations.

Debt collectors must follow specific federal guidelines that establish consumers’ rights and collectors’ responsibilities, including laws such as the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). Many of these laws contain data security and confidentiality provisions.

In addition, individual state laws and regulations may impose requirements over the safeguarding of sensitive consumer information, including obligations that require collectors to inform consumers in the event of a security breach of consumer information. 

Specialized laws such as the Gramm–Leach–Bliley Act (GLBA) and the Health Insurance Portability and Accountability Act of 1996 (HIPAA) require additional security standards to protect against the unauthorized access of consumers’ confidential information.

By creating liability for both debt collectors and their clients, GLBA and HIPAA demand that privacy and security be top priorities in the credit and collection industry. In fact, before a collection agency can enter an agreement to provide services to a healthcare provider or financial institution, the agency must demonstrate its capability to safeguard consumer information at the employee and physical security level, as well as the information technology level.

The following summary of GLBA and HIPAA privacy and security rules explains collectors’ responsibilities and the measures a debt collector must take to ensure compliance with these laws. It is important to note this is not an exhaustive list of the requirement under these laws.

Gramm–Leach–Bliley Act


Under the GLBA, a debt collector must comply with the Safeguards Rule which requires the development of a written information security program containing administrative, technical and physical safeguards appropriate to the agency’s size and complexity, nature and scope of its activities and sensitivity of the consumer information at issue. The GLBA Safeguards Rule requires a debt collector to:

  • Designate an employee to coordinate its information security program in order to ensure accountability and achieve adequate safeguards.

  • Identify reasonable, foreseeable internal and external risks to the security, confidentiality and integrity of consumer information and assess the sufficiency of any safeguards in place to control such risks.

  • Implement policies and procedures to control security risks to customer information and monitor their effectiveness.

  • Oversee service providers by selecting and retaining service providers that are capable of maintaining appropriate safeguards for the customer information and requiring service providers by contract to implement and maintain such safeguards. Evaluate and adjust information security programs in light of the results of testing and monitoring required, material changes to operations, or any other circumstances which may have a material impact on the company’s information security program.

Further, procedures recommended by the Federal Trade Commission (FTC) for debt collectors to remain in compliance with the GLBA Safeguards Rule:

  • Lock rooms and file cabinets where paper records are kept.

  • Use password–activated screensavers.

  • Use strong passwords (at least eight characters long).

  • Change passwords periodically and do not post passwords near employees’ computers.

  • Encrypt sensitive customer information when it is transmitted electronically over networks or stored online. 

  • Refer calls or other requests for customer information to designated individuals who have had safeguards training.

  • Recognize any fraudulent attempt to obtain customer information and report it to appropriate law enforcement agencies.

  • Train employees regularly on the agency’s safeguard policies.

  • Limit access to customer information to employees who have a business reason for seeing it.


HIPAA


Under HIPAA, a debt collector must comply with the Security Rule which requires administrative, physical and technological safeguards to protect the confidentiality, integrity and availability of electronic protected health information (EPHI) in ways appropriate to the agency.  While the requirements under the Security Rule are extensive and not listed in entirety below, a debt collector must:

  • Develop and implement policies and procedures consistent with the covered entity the debt collector is operating for.

  • Designate an employee as a security official to coordinate its information security program in order to ensure accountability and achieve adequate safeguards.

  • Apply appropriate sanctions against employee(s) who fail to comply with the security policies and procedures of the agency.

  • Regularly review records of information system activity, such as audit logs, access reports and security incident tracking reports.

  • Ensure that access to protected health information is only available to employees who need it.

  • Provide appropriate supervision of employees who work with protected health information or in locations where it might be accessed.

  • Control employee access to facilities in which paper records of protected health information are stored, and to software programs by which electronic records of this information can be accessed.

  • Ensure that when a staff member’s employment with the agency ends, his or her access to electronic protected health information is terminated.

  • Isolate the protected health information from other divisions of the company, if the agency is part of a larger organization.

  • Document and review employee use of electronic protected health information. Assign a unique login identifier and password for each employee, in order to trace the use of computer workstations or software programs to access the information.

  • Train all employees and management on the security policies of the agency.

  • Establish a contingency plan for responding to emergencies such as fire, vandalism and natural disasters that may damage systems containing electronic protected health information.

  • Implement a data backup plan to create and maintain retrievable exact copies of electronic protected health information.

  • Carefully monitor the receipt and removal of hardware and electronic media that contain electronic protected health information into and out of a facility, and the movement of these items within the facility.

  • Ensure the proper disposal of electronic protected health information and/or the hardware or electronic media on which it is stored.

  • Use password–activated screensavers that terminate a computer login session after a predetermined time of inactivity.

  • Encrypt consumer information during transmission over an electronic communications network.

  • Report any security incidents to the client.

In addition to complying with HIPAA’s Security Rule, HIPAA also requires debt collectors notify a client of any unauthorized disclosure of unsecured protected health information held on behalf of the client in the event of a security breach. 

Facts and statistics about student loan debt and collections.

  • The annual increase in inflation-adjusted average tuition and fees at public four-year colleges and universities has declined in each of the past five years, from 9.5% in 2009/10 to 0.9% in 2013/14. (Source: The College Board, Trends in College Pricing 2013, p. 15.)

  • The average increase in tuition and fees at public four-year colleges in 2013/14 for in-state students is 2.9% compared to increases of 4.5% in 2012/13 and 85.% in 2011/12. The increase in 2013/14 is the smallest percentage in more than 30 years. (Source: The College Board, Trends in College Pricing 2013, p. 3.)

  • The average out-of-state tuition and fees at public four-year institutions increased by 3.1% from $21,533 in 2012/13 to $22,203. The average tuition and fees at private nonprofit four-year institutions increased 3.8% from $28,989 to $30,094 in 2013/14. (Source: The College Board, Trends in College Pricing 2013, p. 3.)

  • Twelve percent of full-time students in the public four-year sector attend institutions that did not increase their tuition prices at all in 2013/14 and another 41% faced increases below 3%. Three percent of students attend institutions that increased their prices by 9 percent or more. (Source: The College Board, Trends in College Pricing 2013, p. 3.)

  • The median full-time public four-year undergraduate student, in-state and out-of-state, is enrolled at an institution with tuition and fees of $9,011. The median full-time undergraduate student in the private nonprofit four-year sector has tuition of $31,290. (Source: The College Board, Trends in College Pricing 2013, p. 12.)

  • The estimated average tuition and fees for full-time students in the for-profit sector increased by about $70 (.5%), from $15,000 in 2012/13 to $15,130 in 2013/14. (Source: The College Board, Trends in College Pricing 2013, p. 3.)

  • The average annual real rate of increase in in-state tutition and fees at public four-year colleges and universities from 2003/04 to 2013/14 was 4.2%. For private nonprofit four-year institutions, the average annual real rate of increase was 2.3% over the decade.

  • In 2010/11, about 57% of public four-year college students graduated with debt. They borrowed an average of $23,800 in 2011. About two-thirds of students earning bachelor’s degrees from private nonprofit institutions had debt averaging $29,900.(Source: The College Board, Trends in College Aid 2012, p. 4)

  • The U.S. Department of Education, the Department of Health and Human Services and Department of Treasury’s Bureau of Financial Management Service have each established contracts with private collection agencies to collect non-tax debts owed to the Federal Government. The Department of Education contracts with PCAs to assist in collecting defaulted student loan debts. In fiscal year 2012, the department’s PCAs collected $2.9 billion, an increase of $300.0 million or 11.3%. (Source: Department of Treasury Fiscal Year 2012 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • In fiscal year 2012, delinquent education debt collection totaled $13.1 billion, an increase of $1.1 billion or 9% from FY 2011. (Source: Department of Treasury Fiscal Year 2012 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

  • In FY 2012, Education collected $59.9 billion in non-tax receivables, a decrease of $2.4 billion (3.9 percent) from FY 2011, including loan consolidations. At the end of FY 2012, Education’s outstanding receivables totaled $643.3 billion, 69.1 percent of the government’s total receivables. Federal Direct Student Loans ($596.0 billion) and Defaulted Guaranteed Student Loans ($47.0 billion) account for more than 99 percent of Education’s total receivables. (Source: Department of Treasury Fiscal Year 2012 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies.)

Statistics on telephone subscribership in the U.S.

  • Two in every five American homes (41 percent) had only wireless telephones during the second half of 2013—an increase of 1.6 percentage points since the first half of 2013 and 2.8 percentage points since the second half of 2012. In addition, among households with both landline and wireless telephones, 33.6 percent received all or almost all calls on wireless telephones. (Source: Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, July-December 2013, Department of Health and Human Services, National Center for Health Statistics, July 2014.)
  • Approximately 39 percent of all adults (about 93 million adults) lived in households with only wireless telephones; 47.1 percent of all children (nearly 35 million children) lived in households with only wireless telephones. (Source: Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, July-December 2013, Department of Health and Human Services, National Center for Health Statistics, July 2014.)
  • The percentages of adults and children living without any telephone service have remained relatively unchanged over the past three years. Approximately 2.5 percent of households had no telephone service (neither wireless nor landline). Nearly 5.2 million adults (2.2 percent) and 1.8 million children (2.5 percent) lived in these households. (Source: Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, July-December 2013, Department of Health and Human Services, National Center for Health Statistics, July 2014.)
  • Adults living in poverty (56.2 percent) were more likely than adults living near poverty (46.1 percent) and higher income adults (36.6 percent) to be living in households with only wireless telephones. (Source: Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, July-December 2013, Department of Health and Human Services, National Center for Health Statistics, July 2014.)
  • Wireless subscriptions have risen from 55.3 million in 1997 to 326.4 million in December 2012. (Source: CTIA – The Wireless Association, Wireless Quick Facts, 2012.)
  • Wireless penetration for the U.S. population has increased from 19.8 percent in 1997 to 102.2 percent in December 2012. (Source: CTIA – The Wireless Association, Wireless Quick Facts, 2012.)
  • While U.S. consumers represent only 5 percent of the world’s wireless connections, they comprise 50 percent of the world’s 4G/LTE connections. This number is more than double the share of second ranking Japan and almost triple the share of third ranking South Korea. (Source: CTIA – The Wireless Association, Wireless Quick Facts, 2012.)
  • Wireless subscriber connections – active devices associated with subscriptions or prepaid accounts – totaled 326.4 million at the end of 2012. That’s equal to 102 percent of the total U.S. population. (Source: CTIA – Year-End 2012 Semi-Annual Wireless Industry Survey.)
  • More than 152 million subscriber connections in 2012 were smartphones.(Source: CTIA – Year-End 2012 Semi-Annual Wireless Industry Survey.)
  • Participating wireless carriers reported handling almost 1.5 trillion megabytes of data in 2012 – up 69.3 percent from 2011. (Source: CTIA – Year-End 2012 Semi-Annual Wireless Industry Survey.)

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