The Law and Economics of Consumer Debt Collection and its Regulation

69 Pages Posted: 7 Nov 2019

See all articles by Todd Zywicki

Todd Zywicki

affiliation not provided to SSRN

Date Written: 09/29/2015


This article reviews the law and economics of consumer debt collection and its regulation, a topic that has taken on added urgency in light of the announcement by the Consumer Financial Protection Bureau that it is considering new regulations on the subject. Although stricter regulation of permissible debt collection practices can benefit consumers who are in default and increase demand for credit by consumers, overly restrictive regulation will result in higher interest rates and less access to credit for consumers, especially higher-risk consumers. Regulation of particular practices may also have the unintended consequence of providing incentives for creditors to more rapidly escalate their efforts to more aggressive collection practices, including litigation. Finally, the CFPB should take care to avoid imposing disproportionate regulatory burdens on small firms that would reduce competition and promote further consolidation of the industry. Therefore, before enacting any new regulations, the CFPB should be careful to ensure that the marginal benefits to consumers and the economy of new regulations exceeds any costs arising from unintended consequences.

Suggested Citation

Zywicki, Todd, The Law and Economics of Consumer Debt Collection and its Regulation (09/29/2015). MERCATUS WORKING PAPER, Available at SSRN: or

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