CFPB Permanently Bans Medical Debt Collector

Dec 20, 2023

The Consumer Financial Protection Bureau issued a consent order against against a medical debt collector, Commonwealth Financial Systems, for alleged violations of the alleged violations of the FCRA, Regulation V, FDCPA, and Consumer Financial Protection Act.

According to the CFPB, the company failed to conduct reasonable investigations of disputed debts and failed to inform credit bureaus that certain information was being disputed.

Under the consent order, the company has to shut down permanently (including assisting others in debt-related businesses), tell credit bureaus to delete all the information they previously furnished, and pay a $95,000 penalty.

Earlier this year, the CFPB ordered Phoenix Financial Services to pay a $1.675 million penalty and redress to consumers from whom it (allegedly) continued to collected from, even after receiving request for verification.

In its annual FDCPA report, the CFPB spotlighted medical debt—15% of debt collection complaints made to the Bureau in 2022 were related to medical debt—stating “it may violate the FDCPA for a debt
collector to collect a medical bill or amount that the person does not owe due to federal law.”

Debt Validation Goes Digital

The debt validation process can be challenging to track. However, it’s critical comply with the FDCPA’s rule for verifying debts. We recognized the need for compliance and tracking early on and launched a digital dispute feature earlier this year.

Our Dispute Form allows consumers to dispute a file, provide an explanation, and upload documents directly through the Portal. Likewise, firms can conveniently view, track, and reply to disputes digitally. Not only does this streamline the process, it also makes it easier to track compliance and quickly retrieve records.

We’re continuing to digitize and automate the collections process beyond payments to help firms resolve more accounts without sacrificing compliance.

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