The general counsel of the Consumer Financial Protection Bureau gave a speech yesterday to a group of consumer advocates and the two main areas of focus were debt collection and credit reporting. Within those two areas, Seth Frotman drilled down into discussing medical billing and collections, and landlord-tenant screening and debt.
The upshot of Frotman’s remarks related to debt collection were that collectors can and should be held liable for attempting to collect debts or amounts that a consumer may not owe. In the area of medical debt, this can be confusing — between health insurance and financial assistance programs, sometimes the amount a consumer owes changes after the account has been placed by the healthcare provider with the collector. For collectors, the Fair Debt Collection Practices Act is a strict liability standard, Frotman reminded the advocates — attempting to collect on a bill that the consumer does not owe is a violation, whether the collector was told by the creditor that the debt was valid or not. “In short, it is up to the debt collector to ensure their information is correct and up-to-date – it is not the consumer’s responsibility to tell the collector how much they owe,” Frotman said, according to a transcript of his remarks.
Frotman also made it seem like the only reason that medical debts are reported to the credit bureaus are to coerce individuals to pay the debt. The idea that a credit report is meant to provide an accurate financial portrait of a consumer so that lenders can make accurate calculations about the creditworthiness of a consumer never entered the conversation.
States that are taking matters into their own hands — like Colorado and New York so far, with others following suit — also got a thumbs-up from Frotman, who noted that states are able to move faster than the federal government does.
“… state laws can provide relief for people on a timeline that is likely going to be faster than our federal efforts,” Frotman said. “Other states are considering such laws, and we encourage them to do so as being fully consistent with the CFPB’s work in this area.”
When the CFPB follows up with a collector about a consumer complaint and the collector closes the account, to the CFPB, that is a sign “that these collectors do not have confidence that this money is actually owed,” Frotman said. “The federal government is closely examining its authorities with respect to medical billing and collections, and the CFPB is eager to work with states in our oversight of debt collectors.”