Nearly five dozen collection agencies participated in a survey with the Consumer Financial Protection Bureau during the second half of last year, and along with the outline of the proposed rules it released earlier this morning, the agency also released the results of the survey.
The percentage of respondents that are “large” agencies were over-represented in the survey, according to the CFPB. Large agencies, with more than 500 employees, represented nearly 20% of the survey respondents, but only represent 3% of the entire industry.
Nearly half of the respondents collect medical debt, followed by credit card debt (25%), and student loans (15%). Larger agencies also deal with higher employee turnover rates.
In phone interviews, respondents reported that beginning collectors generally earn from $10 to $11 per hour plus incentive pay and that experienced collectors generally earn from $13 to $20 per hour plus incentive pay. According to one respondent, the commission fee that collectors could earn was typically 25 percent of contingency fees earned in excess of a certain threshold. Respondents generally reported attempting to collect on an average of between 1,000 and 3,000 accounts for each collector employed. Most respondents reported a training period of two to four weeks for new collectors. Reported turnover was relatively low among smaller respondents, whereas larger respondents (with more than 250 employees) reported annual turnover rates of 75 percent to 100 percent.
There is also a relationship between the size of the agency and the size of the accounts that those agencies are working. None of the agencies with 99 employees or fewer had clients with more than 1,000 accounts, while half of the agencies with 100 employees or more had clients with at least that many accounts.
Smaller agencies – 34 out of 37 – are more likely to sue consumers than larger agencies – six out of 19 – according to the survey.
There is a lot of useful information in the survey, especially if agencies are looking to benchmark themselves against their peers. The survey delves into collection management systems and how often agencies send letters, how often they make calls, handle disputes, and use vendors. Larger agencies, for example, are more likely to outsource more of their operations, including using letter vendors, call recording, and speech analytics technology.
