RSSDebt collectors violate federal law by collecting legally invalid or inaccurate medical debt, according to Oct. 1 guidance from the Consumer Financial Protection Bureau.
“These illegal practices include double-dipping to get paid for services already covered by insurance, hounding consumers to pay fake or exaggerated charges, misrepresenting consumers’ rights to contest bills, and collecting on debts without documentation that the amount is actually owed,” the CFPB stated. “The CFPB’s action aims to protect consumers from careless or predatory practices that can lead to inflated health care costs.”
The CFPB has received complaints alleging collections notices for debt they do not owe, that were previously paid by insurance or the consumer, or that should have been covered by hospital financial assistance, government programs or insurance.
Companies are not allowed to collect loan amounts that exceed federal or state limits, such as those instituted by the No Surprises Act or state laws. Debt collectors cannot collect on bills that include exaggerated services, or expenses the consumer did not receive, according to the CFPB. “This deceptive practice can drastically inflate consumers’ medical debts, potentially leading to long-term financial distress or even bankruptcy,” according to the bureau.
Companies are not allowed to misrepresent that the amount being collected is fully settled when the payment obligation is uncertain, according to the CFPB. Misrepresenting the status of the amount could pressure consumers into paying negotiable or disputed debts, according to the bureau.
More health care providers in the United States are outsourcing collection and medical billing activities to third parties that could be covered under the Fair Debt Collection Practices Act. Medical billing to patients is often filled with errors, including duplicative or inflated charges, fees for services never received, or charges already paid, said CFPB Director Rohit Chopra.
About 100 million Americans owe more than $220 billion in medical debt. “The CFPB is taking action to ensure that Americans are not unfairly chased by debt collectors over unsubstantiated or invalid medical bills,” Chopra added.
