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A new report by the Arizona PIRG Education Fund and the Frontier Group explores consumer complaints about medical debt, a major source of problems for consumers, since medical debt items on credit reports are often wrong or about the wrong consumer.
According to Medical Debt Malpractice: Consumer Complaints about Medical Debt Collectors and How the CFPB Can Help, medical debt collectors often employ aggressive tactics and attempt to collect debt from the wrong customers – putting consumers' credit records at risk. Medical debt accounts for more than half of all collection items that appear on consumer credit reports. A review of 17,701 medical debt collection complaints submitted to the Consumer Financial Protection Bureau (CFPB) shows that problems with medical debt collection are widespread and harm Americans across the country.
“Consumers deserve protection from unfair, aggressive, and illegal medical debt collection. Fortunately, consumers have a powerful resource in the CFPB, which has already taken multiple actions against collection companies that break the law while collecting medical debt,” stated Diane E. Brown, Executive Director of the Arizona PIRG Education Fund.
Key findings of the Arizona PIRG Education Fund and Frontier Group report include:
- Nearly two-thirds (63%) of 17,701 complaints about medical debt collection reviewed in the report assert either that the debt was never owed in the first place, it was already paid or discharged in bankruptcy, or it was not verified as the consumer’s debt.
- The most complained about medical debt collection company in Arizona was Medical Society Business Services, Inc.
- Many complaints document inappropriate and aggressive tactics including frequent or repeated calls, calls harassing friends and family, threats of legal action, or the use of abusive language.
- Although impacts on credit reports are not categorized by the CFPB, they appear to be a significant source of complaints: 1,810 complaint narratives, or 35 percent of all medical complaint narratives submitted, contain the text “credit report.”
"Medical debt collection is a system run amok," said Gideon Weissman of Frontier Group, report co-author. "Our analysis of CFPB complaint data suggests that many of the consumers facing harassment and damaged credit due to medical debt never owed any money in the first place."
The report’s key recommendations included the following:
- Stop debt collectors and buyers from collecting debts without proper information and documentation about the debt and records of prior communications with the consumer.
- Stop debt collectors from bringing robo-signed cases in court.
- Crack-down on widespread use of threats, harassment and embarrassment in debt collection, and make it easier for the consumer to demand a stop to unwanted communications.
- Protect service members by strictly limiting contact with their commanders to verifications of address.
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