The Consumer Financial Protection Bureau (CFPB) has identified illegal practices by debt collectors, particularly in the collection of medical and rental debts, and is moving to enforce consumer protection laws.
In a press release issued Thursday (September 5, 2024), the CFPB shared findings from its annual debt collection report, highlighting illegal attempts to collect on medical bills that have already been paid or are eligible for financial assistance. The report shows that consumer complaints about medical debt collection accounted for 11% of all collection-related complaints received by the agency in 2023.
One persistent issue identified in both consumer complaints and the CFPB’s research involves debt collectors pursuing medical bills that have already been settled. Many consumers report poor communication between debt collectors and hospitals, often leaving patients to prove they do not owe the debt.
“Many consumers describe inadequate communication and information-sharing between the debt collector and the hospital, shifting the burden to the patient to prove their debt has been resolved,” the CFPB noted.
Another recurring problem involves non-profit hospitals and healthcare providers offering medical financing products to patients without assessing their eligibility for financial assistance. This practice results in debt collectors chasing bills that should not have been charged in the first place.
The CFPB also began accepting complaints about rental debt collection in August 2023, receiving over 1,700 such complaints by year’s end. Renters and law enforcement officials in several states have raised concerns about rent increases driven by illegal price-fixing, which may be facilitated by “revenue management software.”
“Debt collectors pursuing inflated bills due to illegal price-fixing may be in violation of the Fair Debt Collection Practices Act,” the CFPB stated.
Another common complaint from renters and landlords involves fees from rental payment processing services. These fees are often unclear in terms of legality under lease agreements or local laws, complicating matters when targeted by debt collectors.
To address these issues, the CFPB has taken enforcement actions against debt collectors and proposed a rule to ban the inclusion of medical debt on credit reports in many cases.
When announcing the proposed rule in June, CFPB Director Rohit Chopra said: “Medical bills on credit reports are often inaccurate and provide little to no predictive value regarding the repayment of other loans.”
The CFPB’s ongoing efforts to hold debt collectors accountable for illegal practices signal a strong commitment to protecting consumers from unjust financial burdens.
