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CFPB Report Showing 43M in US Have Medical Debt Highlights Glaring Need for Accuracy in Debt Reporting, Collection

Thursday, December 11, 2014

Today, at a Consumer Financial Protection Bureau (CFPB) field hearing in Oklahoma City, Center for Responsible Lending (CRL) Policy Counsel Lisa Stifler detailed growing abuses in medical debt collection that can take advantage of financially-distressed consumers and unfairly strip families of wealth. At the hearing, the CFPB released a report showing 43 million Americans have medical debt and announced that it would require consumer credit reporting agencies to regularly report on consumer disputes.


Stifler released the following statement:

"The fact that the CFPB receives more complaints about debt collection than any other practice—more than 1/3 since July of 2013—speaks to the glaring need for greater accuracy in debt reporting. Too many consumers are being wrongly pursued by debt collectors for medical debts that they do not owe, or for incorrect amounts due to billing or insurance disputes. The billing and payment process is confusing to consumers and there is no standard across the health care industry for when overdue medical debt is placed on a consumer's credit report, or sold to a debt collector.

"When health care providers sell consumer debt to third-party debt collectors, the lack of clarity for consumers is compounded even further. Consumer debt is often sold with limited, inaccurate or incomplete information about the consumer and their debts. Abusive collection tactics can result in harassment for debts that have already been paid, or are too old to be the subject of a lawsuit. Many debt buyers are also increasingly operating as 'lawsuit factories' clogging the courts to collect on the debts they purchase, often resulting in garnished wages and other financial harms.

"Although debt collection plays an important role in the functioning of the U.S. economy, it may also expose American households to unnecessary abuses. It is critical that safeguards, such as clear rules that require debt collectors prove that a consumer owes a debt, are in place to ensure that they do not face abusive collection practices that undermine their financial stability or ability to build assets for the future."

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Andrew High at Andrew.High@responsiblelending.org or 919-313-8533.