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Posted by: Erik Clark
The debt collection industry is big — estimated to be a $12 billion industry in fact, and growing. There are literally thousands of debt collectors in the form of collection companies, law firms, and yes, even debt buyers. How does it all work?
The origin of debt collectors had humble beginnings. They were often in-house departments of companies used to collect on their own delinquent accounts. As credit grew and companies looked to trim costs and eliminate costly departmental expenses, they began to look outside the company for less-expensive alternatives to collect the delinquent accounts. Savvy businesspeople saw a ripe market for these independent collection companies, and with a potential for huge gain, the debt collection industry was born.
So, who are America’s largest debt collection companies? Not such an easy question to answer, as you will soon learn below. Not surprisingly, many of these companies don’t want you to know who, what, and where they are.
We’ll go over four of the major ones and their known abuses of consumers. Need to know how to get collectors to stop calling? Check out our post on the laws that stop creditors like the ones below.
1. NCO Financial
With over $10 billion in assets, One Equity Partners, the parent company who holds NCO Group, Inc., is one of the largest collection companies in the country, and not surprisingly, one of the most prolific, too. Based in Horsham, Pennsylvania, NCO Group is co-chaired by Jay King and Tim Galloway, both of whom bring over 37 years’ experience to the company in collections and have made NCO Financial one of the largest collection companies in America.
Known Abuses of NCO Financial
NCO Financial is no stranger to controversy. Either from the people they collect from, or their very own employees. In addition to the employee concerns and Fair Credit Reporting Act (FCRA) violations, they are further cloaked in secrecy by having numerous subsidiaries to muddy their appearance. These subsidiaries include NCO Financial Systems, Inc.; NCO Customer Management, Inc.; University Accounting Services, LLC; Transworld Systems, Inc.; and Systems & Services Technologies. All of these are owned by One Equity Partners and part of their estimated $10 billion net worth.
2. Portfolio Recovery
Next on our list is Portfolio Recovery, or PRA Group, Inc., a publicly traded debt buyer based in Norfolk, Virginia. This company grew rapidly at the hands of its co-founders, Steven Fredrickson and Kevin Stevenson. Since 1996, it has steadily become one of the largest debt buyers in the U.S. and the world (collecting in 16 countries), with about $831 million in total revenue for 2016.
Known Abuses of Portfolio Recovery
Among the known abuses of Portfolio or PRA Group is when they were sued by the State of New York for abuse and violations of state collection laws. They also received heavy fines from the Consumer Financial Protection Bureau of the federal government of about $27 million in penalties and restitution to consumers. The reason for both of these is quite typical — abusive collection practices toward the account holders — and they were not small, but systemic. They included wrong account numbers, dates and times, interest rates, and so on, to the point that if you were on the unfortunate end of the collection, your head would be spinning trying to figure out just what you owed on the debt, if anything, because the information was just so incorrect and misleading.
3. LVNV Funding
LVNV Funding is a relatively new kid on the block, forming in 2009 in Las Vegas, hence the acronym, LVNV. They have grown exponentially under Kevin Branigan, their CEO. Just like the others mentioned, LVNV likes subterfuge, with its wholly-owned subsidiaries Resurgent, Alegis Group, Sherman Financial, and Pinnacle Financial Group. With all of these, they manage to muddy the water enough to make the poor person getting their collection letters in the mail scream mercy. As is often the case with wholly-owned subsidiaries, they transfer the debt between the various entities. Often a person will get multiple collection letters for the same underlying original account.
Know Abuses of LVNV Funding
LVNV Funding has had its collection agency licenses suspended in many states, such as Maryland, for the usual things — bad affidavits, bad or incorrect information on the original debt, known fraud in collection activities, misrepresentation, and so on. However, as an LLC, it is difficult to ascertain the inner dealings and procedures unlike publicly traded companies, who have to file regulatory documents every year. LVNV was able to run roughshod for the short life span it’s had so far.
4. Encore Capital Group
The king of them all, hailing from sunny San Diego, California, Encore Capital Group is more of a debt purchaser than a true collection company, and publicly traded like PRA Group. Still, it reigns supreme, at least in the revenue sense. Under CEO Kenneth Vecchione, Encore has cornered the market on bad debt, and in the process messed up a lot of lives along the way.
Know Abuses of Encore Capital Group
Encore has gone afoul of both the Dodd-Frank Act and the Consumer Financial Protection Act, not to mention the Fair Debt Collections Practices Act. They are by far the most litigious of the group, filing 500,000 lawsuits a year against downtrodden debtors, many of whom either never get the lawsuit served upon them, or do get served but do not fight it and end up losing by default. This guarantees that the debt will be paid in a most damaging way — by garnishment.
Get help dealing with debt collectors
One thing these debt collectors have in common is they all have run afoul of the laws set up to protect consumers. Consumer debt keeps growing. As credit card debt is inching toward $1 trillion and student loan debt has surpassed $1 trillion, the credit collection industry will only get bigger, and with that comes the potential for more abuse.
If debt collectors keep calling you, consider how bankruptcy may be able to help. The member attorneys of National Bankruptcy Forum are ready to work with you to stop creditor harassment today. Call us for a free debt evaluation, 24/7, at 877-280-4299.
Like this post? See more of our debt collection-related topics below:
- Household Debt Near Great Recession Level: What Does it Mean?
- Do You Have Too Much Debt to Handle? Know the Signs
- Credit Card Debt in Bankruptcy: The Basics
- Can Credit Card Companies Take Your House?
- How Chapter 7 Bankruptcy Works
- When Creditors Come Calling after Your Bankruptcy Discharge
Erik Clark is one of the leading bankruptcy attorneys in Southern California who has had the privilege of representing thousands of clients in chapter 7 and chapter 13 bankruptcy cases in the Los Angeles area. Erik has served as the past President of the National Consumer Bankruptcy Litigation Center (NCBLC) and the American Consumer Bankruptcy College (ACBC). His firm, Borowitz & Clark, is committed to using bankruptcy law as a tool for social justice and was one of the first consumer law firms to join the Law Firm Antiracism Alliance.