(“NCRAs”) accountable for the accurate reporting of medical debt, including a duty to act against abusive furnishers who routinely report inaccurate information regarding medical debt. Specifically, the CFPB reported an estimated $88 billion in medical debt reflected on consumer credit reports as of June 2021, the majority of which are debts under $500. In response, the NCRAs began rolling out guidance to data furnishers regarding their responsibilities as it relates to the changes the NCRAs are making in the reflection of medical debt on consumer reports.
The CFPB’s April report is a response to what it identifies as “the rising volume of medical billing and collection complaints submitted” to the bureau. As CFPB Director Rohit Chopra opined in the report:
“Many Americans feel forced to pay medical bills that they have already paid or never owed to begin with. The credit reporting system should not be used as a weapon to coerce patients into paying medical bills they do not owe.”
The report noted several “key findings,” categorizing the complaints submitted to the CFPB regarding medical debt as consumers reporting “not recogniz[ing] or ow[ing] alleged medical bills,” “suspect[ing] unpaid medical bills are being surreptitiously and unlawfully placed on their credit reports,” “experienc[ing] their credit reports being used as weapons to force payments,” and “report[ing] that collection notices contained large amounts of highly sensitive medical information.”
The CFPB’s impression from the consumer complaints is that they “strongly suggest that many medical bills reported on credit reports are disputed, inaccurate, or not owed.” The CFPB went on to reiterate what it articulated in its March 2022 report on medical debt, that medical debt is not an accurate predictor of a consumer’s ability to pay other bills and credit obligations and that its presence on consumer credit reports does little to help a lender determine risk but does a lot to hinder a consumer’s access to credit.
To combat this purported disproportionate effect, the CFPB stated it is “committed” to engaging with the healthcare industry to educate itself on medical billing practices, working with other government agencies to prevent medical debt from preventing consumers from accessing employment, housing, and credit, and further investigating whether medical debt has any practical use in determining consumer creditworthiness. The CFPB also noted that it intends to “hold bad actors in the consumer financial services marketplace accountable.”
Two reports from the CFPB in recent months focusing on medical debt is a clear indication that the bureau is targeting medical debt collection and enforcement actions are forthcoming. The receivables industry has been put on notice.
If your company purchases or collects medical debt, how confident are you in the accuracy of the data you are receiving and what warranties regarding the accuracy are you provided? Relatedly, what protocols do you have in place to confirm the authenticity of amounts alleged to be owed after a consumer disputes a medical debt? After all, medical debt balances often do not remain static and are subject to adjustment sometimes well after the originator has charged the balance to bad debt. Furthermore, what safeguards do you have in place to ensure that your processing of medical debt, including communicating with consumers regarding their debt, maintains in compliance with HIPPA and the necessity to safeguard sensitive medical information?
These are areas of focus for the CFPB and likewise should, as a corollary, be a focus of the industry.
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