CFPB Report Exposes Widespread Issues in Debt Collection Practices

Consumer Financial Protection Bureau

WASHINGTON, D.C. – In its latest annual report, the Consumer Financial Protection Bureau (CFPB) has unveiled persistent and troubling practices in the collection of medical and rental debts, highlighting the significant challenges faced by consumers across the United States. The report underscores aggressive and often illegal tactics employed by debt collectors, which have exacerbated the financial strain on individuals and families dealing with substantial debt burdens.

Medical debt collection remains a prominent issue, with the CFPB reporting that complaints related to medical debt constituted approximately 11% of all collections grievances received in 2023. A significant concern is the pursuit of medical bills that have already been resolved through non-profit hospitals’ financial assistance programs. The report indicates that many low-income patients have not received the necessary support to address their medical expenses, often leading to these debts being transferred to collectors. This results in consumers being unfairly burdened with the task of proving their debts are not owed.

Furthermore, the CFPB has noted an increase in complaints about medical financing products, which are sometimes offered by non-profit hospitals or healthcare providers without assessing potential eligibility for financial assistance. This practice can lead to collections on debts that should not have been incurred.

The report also sheds light on the burgeoning issue of rental debt, which has seen a surge in complaints since August 2023. With rental debt estimated at over $9 billion nationwide, the report reveals that consumers are often subjected to additional fees and charges that complicate their financial obligations. Allegations of illegal price-fixing using revenue management software have surfaced, which could contravene the Fair Debt Collection Practices Act when such debts are pursued by collectors.

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In response to these findings, the CFPB is actively working to ensure compliance with consumer protection laws, including the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. The Bureau has initiated enforcement actions against collectors for pursuing unverified debts and unlawfully threatening legal action. Moreover, the CFPB has proposed regulatory changes aimed at preventing medical debt from affecting consumer credit reports and has issued guidance to protect homeowners from illicit collection practices tied to defunct mortgages.

This report highlights the ongoing efforts of the CFPB to safeguard consumers from unfair debt collection practices, emphasizing the need for continued vigilance and reform in the financial services sector. As the CFPB continues its supervisory and enforcement activities, the agency remains committed to addressing these pervasive issues and promoting fair treatment for all consumers.

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