Federal Reserve Report Affirms Importance of Debt Collection in the Credit Ecosystem

SACRAMENTO, Calif. -– The Federal Reserve Bank of New York published a report in May 2017 confirming the vital role of debt collection in the credit-based economy. The report, titled Access to Credit and Financial Health: Evaluating the Impact of Debt Collection, is based on data analytics between states with varying degrees of regulation. The analysis found that, “restricting collection activities leads to a decrease in access to credit across the full spectrum of borrowers and to a deterioration in indicators of financial health.” A rise in delinquencies and a reduction in credit scores are among the negative outcomes resulting from restricted collection activities, the effects of which are “concentrated on individuals with the lowest credit scores.”

Access to Credit and Financial Health supports the position of Receivables Management Association International (RMA) that regulation that is not fair and balanced for consumers and businesses leads to reduced consumer access to credit, due to creditors’ diminished ability to recover losses, a point underscored by the fact that “collection agencies recovered over $55 billion in 2013.” When collection efforts are stymied and creditors are unable to recover losses, the cost of credit rises and access to credit narrows, especially for consumers who are considered high risk.

RMA has published whitepapers on the credit ecosystem and its delicate relationship to state-level legislation. “RMA strives to educate the public on the debt-buying industry’s role in the wider credit market,” said Board President Mark Naiman. “We work closely with regulators and consumer groups to form balanced solutions. Our Consumer Resources page provides several resources to consumers on topics such as identity theft, financial literacy, and lawful debt collection practices.”

Despite its negative effects on consumers and businesses, unbalanced state-level debt collection legislation continues to rise. RMA continues to advocate for regulation and legislation that is fair and balanced, to ensure proper consumer protections that allow for the professional and ethical collection of legitimate debt.

About Receivables Management Association International

Receivables Management Association International (RMA) is the nonprofit trade association that represents more than 550 companies that purchase or support the purchase of performing and nonperforming receivables on the secondary market. The Receivables Management Certification Program and Code of Ethics set the global standard within the receivables industry due to its rigorous uniform industry standards of best practice which focus on the protection of the consumer.

Receivables Management Association International provides its members with extensive networking, educational, and business development opportunities in asset classes that span numerous industries. The association continually sets the standard in the receivables management industry through its highly effective grassroots advocacy, conferences, committees, task forces, publications, webinars, teleconferences, and breaking news alerts. Founded in 1997 as Debt Buyers Association, the Receivables Management Association International is headquartered in Sacramento, California.