- Lemberg Law
- FDCPA – Debt & Credit Complaints
- Debt Buyers: History of the Debt Buying Industry
Debt Buying Has Roots in S&L Scandals
In February 2013, the Federal Trade Commission released the results of a study entitled, “The Structure and Practices of the Debt Buying Industry.” The study noted that today’s huge debt buying industry has its roots in the savings and loan scandals of the late ‘80s and early ‘90s, when the federal agency that liquidated failing S&Ls auctioned off outstanding loans owned by the S&Ls. Other creditors saw that sales of debt could be profitable, and thus started selling their own debt.
The FTC pointed to two other factors that brought boom times to debt buyers: the availability of credit leading up to 2008’s Great Recession, which caused consumers to rack up credit card and student loan debt; and a shift in the way large financial institutions (who issue credit cards) dealt with collections – namely by selling off large chunks of charged-off debt to debt buyers. Because of regulations that mandate that banks meet certain capital requirements, it makes financial sense for banks to sell their charged-off debt. The FTC reported that “bank sales of credit card debt directly to debt buyers account for 75% or more of all debt sold.”
When it comes to the business of debt buying, the FTC noted, “there now appear to be hundreds, if not thousands, of entities of varying sizes that purchase debts.” Moreover, the FTC implied that almost any company can become a debt buyer, and that it is a natural fit for third-party debt collection agencies that are already licensed in states that require licensure.
If a debt buyer has been hounding you, to speak with a representative directly and immediately call 844-685-9200 for a free, no obligation case evaluation. Our attorneys have experience in fighting debt buyers and standing up for consumers. If a debt buyer has violated the Fair Debt Collection Practices Act, you’re entitled to file suit in federal court, and could be awarded up to $1,000.