18.104.22.168 Amount and Types of Debt Sold in the United States
Large scale debt buying began after the savings and loan crisis in the late 1980s and early 1990s.146 Data from 1993 to 2013147 (see table below) shows the dramatic growth in sales of consumer debt, which peaked in 2005. Although this data from the Nilson Reports shows that sales of credit card debt have largely declined since 2005, sales of other types of debt have increased significantly.
|Sales of Consumer Debt in Default 1993-2013 (in $ Billions, Face Value)*|
|Year||All Debt||Credit Card Debt|
* The Nilson Report: Issues 792 (July 2003); 806 (Mar. 2004); 835 (June 2005); 857 (May 2006); 880 (May 2007); 901 (April 2008); 921 (March 2009); 946 (Apr. 2010); 969 (Apr. 2011); 992 (Apr. 2012); 1019 (June 2013); 1041 (May 2014).
A 2013 FTC study analyzed information about more than 5000 portfolios of debt containing more than ninety million accounts with a face value of almost $143 billion that had been purchased by nine debt buyers between 2006 and 2009.148 This study found that the three most common types of accounts purchased were credit cards (45%), medical (28%), and telecomm (15%).149
Testimony from the Office of the Comptroller of the Currency (OCC) in 2013 indicated that, in recent years, the nineteen largest banks sold about $37 billion a year in debt to debt buyers.150 The OCC also found that the vast majority of debt sold by the nation’s nineteen largest banks was credit card debt, but other debt sold included automobile, home equity, mortgage, and student loans.151 It also reported that other non-bank entities sell different types of debt, such as cell phone, utilities, and medical debt.152
According to a 2015 CFPB survey of credit card issuers, the volume of debt sold by respondents decreased approximately twenty-three percent from 2013 to 2014.153 In 2014, survey respondents sold accounts worth approximately fifteen percent of the total balance of charged-off debts.154 Sales may have decreased in response to the OCC guidance on debt sales in
August 2014.155 Some credit card issuers had already stopped selling debt in 2013,156 shortly after the OCC’s release of a document outlining best practices in debt sales in July 2013.157 However, at least some credit card issuers started selling debts in 2014 after not selling in 2013.158
A 2017 CFPB study of three online debt marketplaces reviewed information about 298 portfolios containing 1.2 million accounts with a face value of nearly $2 billion.159 The study found that forty-six percent of the accounts advertised for sale were payday loan debt, twenty-seven percent were credit card accounts, and the remainder included medical debts, auto deficiencies, telecom, utility, and retail debts.160
146 Fed. Trade Comm’n, The Structure and Practices of the Debt Buying Industry 12 (Jan. 2013), citing Rozanne M. Andersen & Andrew M. Beato, ACA Int’l, Comments of ACA International Regarding the Debt Collection Workshop 29 (June 6, 2007).
147 No data was available from the Nilson Report before 1993 or after 2013.
148 Fed. Trade Comm’n, The Structure and Practices of the Debt Buying Industry 8, App. D (2013).
149 Id. at T-4.
150 Shining a Light on the Consumer Debt Industry: Hearing Before the Subcomm. on Financial Institutions & Consumer Prot., Senate Comm. on Banking, Hous., and Urban Affairs, 113th Cong. (July 17, 2013) (statement of the Office of the Comptroller of the Currency), available online as companion material to this treatise.
153 Consumer Fin. Protection Bur., The Consumer Credit Card Market 256 (Dec. 2015).
154 Id. at 251 (number includes all sales, not just initial placements).
155 Office of the Comptroller of the Currency, Risk Management Guidance, Bulletin 2014-37 (Aug. 4, 2014).
156 See, e.g., Maria Aspan, Wells Fargo Halts Card Debt Sales as Scrutiny Mounts, American Banker, July 28, 2013; Maria Aspan and Jeff Horwitz, Chase Halts Card Debt Sales Ahead of Crackdown, American Banker, July 1, 2013.
157 Office of the Comptroller of the Currency, Risk Management Guidance, Bulletin 2014-37 (Aug. 4, 2014).
158 Consumer Fin. Protection Bur., The Consumer Credit Card Market 256 (Dec. 2015).
159 Consumer Fin. Protection Bur., Market Snapshot: Online Debt Sales 5 (Jan. 2017) (portfolios entered online marketplace between January and August 2015).
160 Id. at 7.