Every year, debt collectors contact Americans because of debt related to medical expenses. Medical debt collectors often use aggressive tactics, and even attempt to collect debt from the wrong people — putting consumers’ credit score at risk. The Consumer Financial Protection Bureau (CFPB) aims to protect consumers against these unfair, deceptive, and abusive collection practices and take action against companies that break the law.
Consumer Complaint Spotlight: Consumer Harm Caused By Medical Debt Collection
Unverified Debt On Credit Reports
A consumer found debt on their credit report despite their healthcare provider confirming that there weren’t any payments owed. After asking the company that placed the debt, Puget Sound Collections, to remove it from their credit report, they were told they have to pay the debt before it will be removed.
Untraceable Companies Reporting Debts
One consumer found debt on their credit report from a medical bill they didn’t owe, placed by a company they couldn’t locate. The consumer wrote the CFPB: “I looked for the collection company online, but it is as though it doesn’t exist… How am I to clear up my credit card report if this company doesn’t exist?”
Mistaken Identity Causing False Debt
One consumer was harassed over a bill belonging to another person with the same name. After receiving calls from Affiliated Collection Services, the consumer called the hospital responsible. They were assured the debt would be removed, but the consumer later found it on their credit report.
Billing Errors Affecting Credit Scores
A consumer from Texas reported that their doctor’s billing department informed them they erred in submitting payment to collection and requested the collection agency remove the charge from the consumer’s credit report — one month later, the item was still reported.
Harassing Phone Calls To Families
A consumer talked to a debt collector “who was rude and yelling at me and threatening to take legal action.” The collector later called the consumer’s sister and father, harassing them on the phone and asking them for personal information.
Collection Agencies Contacting Friends Of Consumers
A consumer from Washington State asserts that a debt collection company called the elderly mother of the consumer’s boyfriend. The company also provided the consumer with false information and used abusive language.
Looking for more information?
Dig deeper into our research on medical debt malpractice, and how the CFPB is working to protect consumers from unfair and illegal debt collection.
Medical debt collection affects millions of Americans.
Based on survey results from a January 2017 Consumer Bureau study, more than 40 million Americans are contacted about debt related to medical expenses each year. That amounts to nearly one in eight Americans. For consumers that do owe money for medical procedures, these contacts may be stressful and time consuming.
But medical debt collection doesn't only affect consumers with legitmate debt. A 2017 Consumer Bureau survey found that 53 percent of consumers contacted about debt in the past year believed they either did not owe the debt, were being contacted about the wrong amount, or were being contacted about a family member's debt.
Some debt collectors use aggressive tactics including threats and job disruption.
Tactics employed by debt collectors include incessant calling, posing as someone else, including police, lawyers, or hospital staff, contacting places of business or family members, or filing lawsuits against consumers whose debts are not verifiable or enforceable.
Most harassment and aggressive tactics are banned under the 1977 Fair Debt Collection Practices Act (FDCPA), however, debt collection companies are routinely found to be violating debt collection law. As of February 2017, 139 debt collectors had been banned from further debt collection by the Federal Trade Commission.
Inaccurate and unfair credit reporting can harm consumers’ financial well-being.
More than 40 million Americans have medical debt on their credit reports. But often, this debt is inaccurate, and may not be a fair assessment of credit worthiness.
The Fair Isaac Corporation (FICO), owner of the most widely used method for calculating credit scores, reported that the appearance of any debt greater than $100 on a credit report will reduce a credit score of 680 by more than 40 points and a score of 780 by more than 100 points.
The Consumer Bureau protects consumers from abusive medical debt collection.
The Consumer Bureau was created to “protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law.”
In June 2015, the Consumer Bureau took action against the medical debt collection company Syndicated Office Systems for “for mishandling consumer credit reporting disputes and preventing consumers from exercising important debt collection rights.” The Consumer Bureau ordered the company to provide $5.4 million in relief to harmed consumers and pay a $500,000 penalty, along with correcting its business.
The Consumer Bureau is currently engaged in a rulemaking process to protect consumers from exploitative debt collection practices, including rules to limit excessive communications and to require straightforward debt collection mailings for easier dispute fillings and payments.