Debt Collectors Hound Black Borrowers More Frequently Than White Ones

Despite being no more likely to fall behind on their credit card bills, African Americans are far more likely than white borrowers to be targeted by debt collectors.

Seven in 10 African Americans surveyed by the think tank Demos report getting calls from bill collectors, compared to just 50 percent of whites. Yet there were “no significant differences in the number of times African Americans and whites were late on a credit card payment or faced a higher interest rate as a result,” the group reports. The findings come from a much broader survey of how Americans use credit and experience debt.

A trade association spokesman defended the industry to the Huffington Post, saying that debt collectors “don’t get into the ethnic information” on the debtors they pursue. Demos’ Catherine Ruetschlin, who co-authored the report, suggested that there is a feedback loop between the racial disparity in debt collector calls and the overall disparities in the economy.

“African-American households are more likely to have been called by bill collectors because they are more likely to have blemishes on their credit history that would send debts to collection agencies,” Ruetschlin told the Huffington Post. Those credit blemishes derive from the greater obstacles black America faces at finding work, securing equal pay, and building wealth over the course of their careers. The financial crisis also worsened the disparity in credit scores between white and black borrowers, in part because black homeowners were disproportionately targeted for foreclosure. Furthermore, white neighborhoods have retained their property values more effectively throughout the foreclosure crisis in large part because banks neglect the upkeep of properties they own in black and latino neighborhoods. Non-white Americans still face housing discrimination years after laws were passed to ban the most egregious forms of racism by realtors and landlords.


Even if these credit-damaging hurdles are driving the racial disparity in debt collection, collectors are due for a regulatory crackdown. Consumer complaints about debt collector abuses have tripled since 2002 and one in seven Americans face collection claims. Yet the companies that collect those debts have slipped into a “regulatory void” for years. Because dinged credit scores can keep people from finding work, among other things, aggressive and abusive debt collector practices put an anchor on struggling peoples’ economic prospects. The Consumer Financial Protection Bureau is getting set to step into the void and start policing debt collectors.