Medical Debt Malpractice
Millions of Americans are contacted by debt collectors every year over debt related to medical expenses. Our new report found a laundry list of mistreatment — from constant threats of arrest to impersonation of lawyers and doctors. The majority of those harassed by medical debt collectors had already paid their bills or never owed them to begin with.
That’s why our consumer watchdog, the Consumer Financial Protection Bureau, is so crucial. The agency ensures consumers are heard and has consistently held medical debt collection companies accountable. Complaints submitted to the CFPB suggest that many consumers contacted about medical debt should not have been contacted in the first place.
What we found about medical debt
Our report found nearly two-thirds (63 percent) of complaints about medical debt collection assert that the debt was never owed in the first place, was already paid or discharged in bankruptcy, or was not verified as the consumer’s debt.
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.”
Zombie debt is old debt that you thought you either settled and buried or that you’re no longer on the hook for it. Technically, it is debt that has passed its statute of limitations, meaning debtors can no longer be sued for it. This period of time depends on the state, but typically ranges between three and 10 years. However, if collectors can convince or trick debtors to make even a token payment on zombie debt, then its statute of limitations may be restarted, making it legal to sue the consumer.
Inaccurate and Unfair Credit Reporting Can Harm Consumers’ Financial Health
Credit reports and scores play an important role in a consumer’s financial life and the functioning of the overall economy. Medical debt accounts for more than half of all collection items that appear on consumer credit reports. More than 40 million Americans have medical debt on their credit reports. Yet these medical debt items can be inaccurate, and also may not be a fair way of assessing credit worthiness.
The CFPB Protects Consumers from Abusive Medical Debt Collection
The Consumer Bureau has already taken actions against at least 29 different companies for illegal debt collection and debt buying practices. And right now, the agency is in the process of developing rules to protect consumers from exploitative debt collection practices, including rules to limit excessive communications and to require straightforward debt collection mailings with tear-offs to allow easy dispute filings and debt payments.. The CFPB has published extensive research on debt collection, including a January 2017 consumer survey, and a study of medical and non-medical debt collection impacts on credit reports.
What constitutes ‘harassment’ from debt collectors?
How do you you know if a debt collector is acting within the law or harassing you? Whether the debt is legitimate or not, most harassment and aggressive tactics are banned under the 1977 Fair Debt Collection Practices Act (FDCPA).
The FDCPA prohibits debt collectors from:
Making contact at times or places known to be inconvenient; debt collectors must assume that contact before 8 AM and after 9 PM is inconvenient.
Contacting most other people about your debt. Debt collectors can call up people you know, but only to find out contact information, and cannot say anything about your debt.
Contacting you after you’ve told them to stop.
Harassment, including making threats, publishing public lists of debts, using obscene or profane language, or intentionally annoying debtors with phone calls.
Making false statements, including pretending to be an attorney or law enforcement official, misrepresenting the amount owed, or claiming that the debtor will be arrested if they don’t pay.