Credit card usage has grown dramatically in recent years. From 1993 to 2007, the amount charged to U.S. credit cards rose from $475 billion to more than $1.9 trillion, according to estimates from the Card Industry Directory. While more than 6,000 depository institutions issue credit cards, the majority of accounts are concentrated among a small number of large banks. As shown in table 1, at the end of 2007, the top six credit card issuers accounted for about 83 percent of the outstanding credit card loans nationwide. In 2008, issuers had more than $23 billion in nonsecuritized debt that was from 30 to 180 days delinquent, according to data from Call Reports. As seen in figure 1, credit card delinquency rates have fluctuated over time. According to Federal Reserve data, these rates averaged about 4.4 percent from 1991 to 2007, but since that time have risen sharply to about 6.6 percent in the first quarter of 2009. When consumers fall more than 180 days behind on paying their credit card bills, banks “charge off” the delinquent account. Charged-off loans are generally considered uncollectible—usually because of cardholder bankruptcy, death, or prolonged delinquency—and are removed from issuers’ portfolios. Federal Reserve data show that in the first quarter of 2008, issuers charged off $4.2 billion, which represented about 4.7 percent of their outstanding credit card debt. By contrast, in the first quarter of 2009, the amount charged off had increased to about $7.5 billion, which represented a charge-off rate of 7.6 percent. The debt collection industry comprises a variety of participants, including companies that specialize in the collection of debt, debt collection law firms, and debt buyers, which purchase delinquent debt for a fraction of its face value. These companies handle credit card debt as well as other forms of debt, including utility, health care, telecommunication, and automobile loans, as well as delinquent taxes. According to the U.S. Census Bureau, in 2006 more than 4,400 debt collection companies in the United States collectively employed approximately 143,000 people. Many of these companies were very small—43 percent employed 4 or fewer employees, while about 3 percent had 500 employees or more. The small agencies may operate within a limited geographic range, while the largest corporations may operate in every state and internationally. The debt collection industry has experienced consolidation in recent years, largely due to mergers and acquisitions. The four largest debt collection companies represented about 10 percent of total industry revenues in 1992 and 19 percent of total industry revenues in 2002, the most recent year the Census Bureau collected this statistic. Because most debt collection companies are privately held, limited data exist on the debt collection industry’s precise size and other attributes. However, several sources, including FTC and some industry participants and analysts, state that the industry has grown in recent years. Kaulkin Ginsberg, a firm that provides research and other services to the debt collection industry, estimated that in 2006, revenues were about $10 billion for third-party collection agencies and about $1.2 billion for law firms specializing in debt collection. ACA International, a credit and collection industry trade association, commissioned an industry survey that estimated that in 2007 collection agencies recovered about $58 billion in delinquent debts, although these estimates may not have been very accurate. One significant change in the debt collection business in recent years has been the growth of debt buying. Debt buyers include firms whose business model focuses on the purchase of debt, as well as collection agencies and collection law firms who collect both on debt owned by others as well as debt they purchase and own themselves. In addition, some firms are passive debt buyers—investors that buy and resell portfolios but do not engage in actual debt collection themselves. While little comprehensive data exist on the debt-buying industry, Kaulkin Ginsberg estimated that the amount of debt purchased grew from about $57 billion in 2003 to $100 billion in 2006, with credit card debt representing about 75 percent of the 2006 total. In May 2006, an industry trade journal, Collections and Credit Risk, stated that the global debt-buying market had sales of an estimated $158 billion annually and that $100 billion of credit card debt is sold annually in the United States alone. While the exact number is not known, hundreds, and possibly thousands, of entities purchase debt, according to DBA International, a trade association for debt buyers. The debt-buying industry is highly concentrated, and according to The Nilson Report—which provides news and conducts research on consumer payment systems—10 buyers were responsible for 81 percent of all of the credit card debt purchased in fiscal year 2007. Only five debt-buying firms are known to be publicly traded companies, and our review of these firms’ filings with the Securities and Exchange Commission found that four of them report purchasing credit card debt. Portfolio Recovery Associates, Inc., reported it had purchased more than $32 billion, face value, of credit card debt from 1996 to 2008, representing 82 percent of its overall debt portfolio. Asset Acceptance Capital Corp. had purchased more than $22 billion in credit card debt from 1999 to 2008, representing 64 percent of the face value of its debt portfolio. In addition, Encore Capital Group reported it purchased more than $201 million in credit card debt in 2008. A fourth company, Asta Funding, indicated it purchased credit card debt, but did not specify the amount. A variety of federal and state laws address debt collection practices, and a number of federal and state agencies play a role in overseeing the debt collection industry, conducting enforcement activities, and educating consumers about debt collection. Congress has passed several laws that govern the practices of creditors or third parties in the collection of debt, including FDCPA, the Federal Trade Commission Act (FTC Act), and the Fair Credit Reporting Act (FCRA). The primary federal law governing third-party debt collection practices is FDCPA, which Congress enacted in 1977 in response to concerns about the practices of many debt collectors. FDCPA applies to third-party debt collectors, a term that includes collection agencies that operate on a contingency basis, collection law firms, and debt buyers, but generally does not apply to original creditors collecting on their own debt. According to the Senate report accompanying FDCPA, creditors were exempted because it was believed that their incentive to protect ongoing customer relationships made them less likely to engage in abusive collection practices. FDCPA prohibits debt collectors from using abusive, deceptive, and unfair debt collection practices as well as other specific practices: Communications. The act regulates how collectors can communicate with consumers who may owe a debt and with others associated with the consumer. For example, it prohibits a collector from informing a consumer’s employer about the debt and prohibits collectors from calling before 8:00 a.m. or after 9:00 p.m. Consumers also may request that the collector cease further communication. Treatment of debtor. Debt collectors may not harass, oppress, or abuse consumers; use or threaten violence; use obscene language; or use a telephone to engage in actions intended to annoy, such as causing the telephone to ring repeatedly. False or misleading representations. Debt collectors may not misrepresent who they are, falsely represent the legal status of the debt, fail to disclose to the consumer that they are attempting to collect a debt, or imply that nonpayment is a crime. Unfair practices. The act prohibits the use of unconscionable or unfair practices, including trying to collect the wrong amount of debt; adding unauthorized fees, interest or other charges to the debt; or causing the consumer to incur collect-call telephone charges. FDCPA also dictates the process debt collectors must use during the initial communication with the consumer and the steps a consumer can take to dispute a debt. Within 5 days of a collector’s initial communication about a debt, the collector must send the consumer a written notice—a validation notice—that includes the amount of the debt, the name of the owner of the debt, and a statement informing the consumer that the debt is assumed valid unless the consumer disputes the debt in writing within 30 days. If the consumer disputes the debt within that period, the collector must cease collection efforts until the collector provides the consumer with verification of the debt. FTC has primary government enforcement authority under FDCPA— except to the extent that this enforcement authority is given to seven other federal agencies for entities under their jurisdiction. FTC has a number of enforcement options for those who violate FDCPA. FTC can seek a court order prohibiting defendants from engaging in conduct and requiring that they pay monetary relief, including restitution to consumers, disgorgement of ill-gotten gains, and civil penalties of $16,000 per violation. FDCPA also provides consumers with a private right of action—allowing them to bring civil actions and be awarded monetary damages if collectors engage in prohibited collection practices or otherwise do not adhere to the act’s requirements. The FTC Act, enacted in 1914 and amended on numerous occasions, gives FTC the authority to prohibit and take action against unfair or deceptive acts or practices. Certain practices that violate FDCPA provisions may also violate section 5 of the FTC Act, and FTC often will bring enforcement actions under both statutes in its cases against third-party debt collectors. In addition, FTC and federal depository regulators can use the FTC Act to address unfair or deceptive debt collection practices by original creditors, who are not covered by FDCPA. The FTC Act also authorizes FTC to obtain a court-ordered injunction to halt the activities of any entity that it believes is violating the laws it enforces, including FDCPA.