WASHINGTON—A new report from the CFPB identifies the challenges American families say they are facing when debt collectors pursue “allegedly unpaid” medical bills.”
The report is based on 8,500 complaints submitted in 2022 by servicemembers, older adults, and other consumers relating to medical debt collections, according to the CFPB’s annual report to Congress on the Fair Debt Collection Practices Act.
The report also:
- Reviews how the CFPB and states say they have worked to stop the collections of medical bills that are “inaccurate or not even owed at all.
- Provides updates on the debt collection market more broadly
- Summarizes activities by the CFPB and other federal agencies relating to debt collection, including the Federal Trade Commission (FTC) and its actions under the FTC Act to protect small businesses from unfair and deceptive debt collection practices.
‘Tens of Millions’
“Tens of millions of people are pursued by debt collectors for medical bills, and today’s report highlights the problem of the collection of medical bills that are inaccurate or not owed,” the Bureau said.
The Bureau noted it has previously described the significant evidence, including reports from consumers themselves, that the collection, furnishing, and reporting of medical bills is plagued by inaccuracies.
“In 2022, the CFPB received thousands of consumer complaints about medical debt collection,” the CFPB said. “The issues raised by consumer complaints include that the pursued medical bills had already been paid, were not owed by the patient or family, or were for inaccurate amounts; collections of medical bills began long after services were provided – with some being collected decades after care; and collectors placed medical bills on consumers' credit reports without first contacting consumers. Among those who reached out to the CFPB about problematic experiences with medical debt collections were servicemembers and older adults, despite generally having insurance coverage and access to free or reduced cost care.”
The Response
The CFPB reported that in response to the problems raised by consumers and the its own research, the report “makes clear”:
- Medical debt collectors may violate federal law when they attempt to collect bills that are not actually owed or are the wrong amount. “Collecting debts that are actually not owed or collecting wrong amounts may violate the Fair Debt Collection Practices Act or the Consumer Financial Protection Act’s prohibition on unfair, deceptive, or abusive acts or practices,” the CFPB said. “This includes instances in which a collector is collecting charges for services the patients never received, collecting for more expensive versions of services than what were actually provided – often called “upcoding” – or collecting amounts based on rates that are inconsistent with applicable state law.
- States can generally enforce their own debt collection laws to protect consumers. “Many states have proposed or enacted laws in recent years providing significant consumer protections with respect to the collection and reporting of medical bills,” the CFPB said. “Preemption of state law is narrow under both the Fair Debt Collection Practices Act and Fair Credit Reporting Act, and preemption would generally not apply to state restrictions on the collection, furnishing and reporting of medical bills. Additionally, inaccuracies in the collection, furnishing, and reporting of medical bills are common, so state restrictions on these practices are unlikely to result in less accurate or robust collections or credit reporting.”
Steps Being Taken
The CFPB said it is taking steps to ensure that medical debt collectors follow the law, including the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.
Read the report, Fair Debt Collection Practices Act CFPB Annual Report 2023.
Learn more the CFPB’s work in the area of medical debt.
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