The effect of debt collection laws on access to credit

Debt collection is an important part of the consumer credit ecosystem, but has received little attention in the economics literature. Regulations on collection practices can protect consumers, but may also lead to unintended consequences if the costs of better practices are passed on to creditors, who in turn restrict consumers’ credit access or raise prices. Using detailed data on new credit card accounts, we study the effects of recent laws and regulations in four states that instituted conduct restrictions. We find that such restrictions reduce access to credit card accounts and raise interest rates, but that this effect is very small.