Too Late for Collections Agencies to Resist Regulation?

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Too Late for Collections Agencies to Resist Regulation?

The Association of Credit and Collection Professionals (ACA) posts on its web site a whole list of impressive statistics about third-party collections agencies.

Collections Agencies Are Great. Who Knew?

For example:

• In 2006, the collections agency industry employed 434,000 collectors. And the Bureau of Labor Statistics expects that figure to jump by 23 percent by 2016.


• In 2007, the industry returned $40.4 billion into the U.S. economy.


• If that money hadn't been returned to creditors, businesses would have had to increase their prices to cover the shortfall. And those increases could have cost the average American family $354 in that year alone.

A Strong Bill Collection Story…

That's a strong story by any standards. Add in the fact that a mechanism for enforcing contracts is essential in any free-market economy, and only the most biased legislator could fail to be impressed.

… And a Well-Kept Secret

But how many federal or state lawmakers would recognize these facts? Sure, everyone knows about cowboy collections agencies. There are stories about those in the media all too often.

But how often does anyone hear about the positive benefits that respectable agencies (the vast majority) bring to society? Who knows that the average American family would be $354 a year worse off without the collections agency business?

A New Chapter for Collections Agencies

Starting this month, more legislators will be hearing the industry's side of the story. Because September 30 saw the grand opening of the ACA's federal government affairs office in Washington D.C. The Association's president, Karolyn Rubin, performed a ribbon-cutting ceremony outside the newly acquired building.

And the next day more than 20 ACA members went to the Hill to meet with members of Congress, and lobby for support.

Too Little?

The ACA's press release doesn't reveal how many lobbyists will be employed to represent collections agencies in the new office. But, judging by photographs of the building, it's unlikely to be more than a handful.

Let's get this in perspective. In August, according to Bloomberg, the health industry had 3,300 lobbyists working to influence 535 members of congress, and 100 senators. That's six lobbyists per lawmaker.

Of course, nobody's suggesting that the collections agency industry could--or should--match this. But it does give some clue about just what effort can be involved in influencing new laws.

Too Late?

And it's not as if ACA's lobbyists have a lot of time. The ribbon was cut outside the association's new offices five days after the discussion draft of the Consumer Financial Protection Agency Bill was published. And on October 8, Rep. Barney Frank (D-MA), Chairman of the House Committee on Financial Services, announced that his committee is scheduled to meet on October 14 to discuss it, and other measures.

How much the new law might affect collections agencies is as yet unknown. The current draft is certain to be unrecognizable compared to the final act.

But one thing's for sure: ACA lobbyists have very little time to represent the industry's point of view.

Collections Agencies Must Celebrate Progress

None of this detracts from the importance of the step that the ACA has made in opening its new office. Progress has to be welcomed, and the ACA deserves warm congratulations.

But the collections agency industry as a whole should be investing much more in lobbying.

And it's unlikely that the ACA will turn away contributions from anyone who'd like to see a greater presence in D.C.

Sources

ACA

Bloomberg

Bureau of Labor Statistics

House Financial Services Committee (PDF)

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