WASHINGTON—The Consumer Financial Protection Bureau has taken action against medical debt collector Phoenix Financial Services for numerous debt collection and credit reporting violations.
“In at least thousands of cases, Phoenix continued to attempt to collect on a debt that was not substantiated after a consumer disputed the validity of the debt,” the CFPB said.
The order requires Phoenix to pay redress to affected consumers, and pay a $1.675 million penalty to the CFPB’s victims relief fund.
About the Company
According to the Bureau, Phoenix is a third-party debt collector with its principal place of business in Indianapolis, Indiana. Phoenix collects primarily past-due medical debts, and furnishes information about consumers to consumer reporting companies. Between January 2017 and December 2020, Phoenix received approximately 54.4 million accounts with allegedly outstanding and owed debts from its clients for collection, the agency stated.
In a report published in 2022, the CFPB found that 43 million consumers had medical bills on their credit reports and that American families owed a total of approximately $88 billion in medical bills.
“Medical debt affects people’s ability to access affordable credit, find quality housing, or even obtain a job,” the CFPB said. “One of the findings from the CFPB’s research is that many consumers report that the medical tradelines on their credit reports are not accurate. When inaccurate or false information is furnished to consumer reporting companies, it can be a form of coercing patients and their families into paying medical bills and debts they do not owe.”
What Investigation Found
The CFPB said its investigation found Phoenix sent collection letters to consumers who had disputed the validity or accuracy of their purported debts, even though Phoenix had not obtained substantiation for the debts. Debt collectors are required to have a reasonable basis for asserting that a consumer owes a purported debt if a dispute is submitted.
“Phoenix’s sending of unlawful debt collection letters risked harming consumers by pressuring or inducing them to pay debts they did not owe,” the Bureau said. “In addition to sending the debt collection letters, Phoenix also furnished debt information to consumer reporting companies. Phoenix’s failure to conduct reasonable investigations of disputes likely resulted in many inaccuracies remaining on consumers’ credit reports, and harmed consumers in a number of ways, such as making credit more expensive or inaccessible.”
Requirements of Order
The order requires Phoenix to:
- Cease unlawful collection and credit reporting practices. “Phoenix is prohibited from making any representation that a consumer owes a debt unless Phoenix can substantiate the debt claim at the time of the representation. Phoenix must also establish and implement written policies and procedures to ensure that it conducts reasonable investigations of disputes about information furnished to consumer reporting companies, including written policies and procedures related to the handling of consumer disputes.”
- Cooperate with CFPB examinations. “Phoenix will be subject to the CFPB’s supervisory authority for the duration of the order. Conducting supervisory reviews is one of the CFPB’s key tools to ensure that entities comply with the law.”
- Provide redress to consumers. “Phoenix must provide redress to consumers who received an unlawful debt collection letter from Phoenix after disputing the validity of an alleged debt. The company must refund any amounts consumers paid to Phoenix on an unverified debt after receiving the unlawful letter.”
- Pay $1.675 million in penalties. “Phoenix is required to pay a $1.675 million penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.”
You Can Now Get CUToday.info’s Daily News Headlines in Your Mailbox at the Low, Low Price of Free
Are you missing out on the latest news in credit unions? Missing the trends and developments you need to be aware of? We can help. Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
And it’s free!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.