The Consumer Financial Protection Bureau (CFPB) has cracked down on Commonwealth Financial Systems, a medical debt collector, for illegal practices in trying to collect unverified medical debts. The Pennsylvania-based company will now have to cease operations and pay a fine of $95,000 to the CFPB’s victims relief fund.
Commonwealth Financial Systems is a third-party debt collector that specializes in collecting past-due medical debts. They also provide information about consumer collection accounts to consumer reporting companies. However, their practices have come under scrutiny for violating consumer protection laws.
The CFPB found that Commonwealth violated the Fair Credit Reporting Act by failing to conduct reasonable investigations into disputed debts. Moreover, they neglected to inform consumer reporting companies when certain information was being disputed. In addition, Commonwealth also violated the Fair Debt Collection Practices Act by continuing to attempt to collect disputed debts without providing substantiating documentation.
The enforcement action taken by the CFPB underscores its authority under the Consumer Financial Protection Act to act against entities that violate consumer financial protection laws. As part of the order, Commonwealth must permanently shut down and is banned from participating in or assisting others in any debt collection activities, debt buying, debt selling, and consumer reporting activities. Additionally, they must request all consumer reporting companies to delete all information about any consumer collection accounts they previously furnished.
This action comes in the wake of the CFPB’s findings that tens of millions of people are pursued by debt collectors for medical bills. The bureau has noted significant evidence, including reports from consumers themselves, that the collection, furnishing, and reporting of medical bills is often riddled with inaccuracies.
This case serves as a reminder of the importance of consumer rights and the role of regulatory bodies like the CFPB in ensuring those rights are protected. It is hoped that such actions will serve as a deterrent to other companies engaging in unethical debt collection practices.
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