The CFPB has issued its annual Fair Debt Collection Practices Act report covering the CFPB’s debt collection activities in 2022. The report incorporates information from the FTC’s most recent annual letter to the CFPB describing its 2022 activities in the debt collection market.
CFPB Report. The CFPB report includes a “spotlight” section on the collection of medical bills. In this section, the CFPB identifies issues commonly raised in consumer complaints including that: the medical bill being collected had already been paid or was being collected long after services were provided; the medical bill was placed on the consumer’s credit report without the consumer first being contacted about the bill; and the amount being collected was inaccurate.
The CFPB cautions that medical debt collectors may violate the Fair Debt Collection Practices Act or the Consumer Financial Protection Act’s UDAAP prohibition when they attempt to collect bills that are not actually owed or are the wrong amount. 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”), collecting amounts based on rates that are inconsistent with applicable state law, collecting amounts that are not owed due to prohibitions in federal laws such as the No Surprises Act or the Nursing Home Reform Act, or collecting amounts that are not recoverable under applicable state law.
The section on medical collections also covers state law developments. The CFPB discusses recent state efforts to enact laws dealing with the collection and reporting of medical bills. According to the CFPB, because FCRA and FDCPA preemption is narrow, it would generally not apply to state restrictions on the collection, furnishing, and reporting of medical bills. The CFPB also discusses First Amendment challenges to state laws dealing with the collection and reporting of medical bills. According to the CFPB, its research casts doubt on claims of industry participants that state restrictions on the collection, furnishing, and reporting of medical bills will reduce the reliability of the credit reporting system. In September 2023, the CFPB launched a rulemaking process under the FCRA to eliminate medical bills from credit reports.
The CFPB report also includes sections on debt collections complaints, results of examinations of debt collectors publicly reported in Supervisory Highlights, and enforcement actions involving alleged debt collection activity in violation of the FDCPA and CFPA (which we blogged about here and here.)
FTC Letter. The FTC’s letter discusses 2022 activity in previously-filed FTC enforcement activity related to debt collection directed at small businesses (which we blogged about here) and the distribution of redress to consumers in 2022 based on prior settlements. It also discusses the settlement of the enforcement action brought by the FTC and 18 state attorneys general in 2022 against Harris Jewelry, a national jewelry retailer that markets and sells military-themed gifts, alleging that Harris Jewelry violated the FTC Act and TILA by engaging in unlawful sales and credit practices targeting servicemembers and failing to make required disclosures. The FTC notes that the settlement requires the company to stop collection of millions of dollars of debt. The FTC also discusses its efforts to “combat unauthorized charges,” particularly where consumers are tricked into incurring unwanted charges through the use of “dark patterns,” including two enforcement actions involving dark patterns (which we blogged about here.)