RSSRental and medical debt collectors are using illegal tactics to collect consumer debt they are not owed, according to a recent Consumer Financial Protection Bureau annual report on debt collection.
“Medical debt collectors often attempt to collect bills that have already been satisfied by nonprofit hospitals’ financial assistance programs,” according to the Sept. 5 report. “Additionally, nonprofit hospitals fail to properly address medical bills from low-income patients who should receive financial assistance and instead send the bills to debt collectors.”
The bureau receives consumer complaints about receiving medical financing products, which are offered by some nonprofit hospitals along with other health care providers, without reviewing their eligibility for financial assistance. Consumers alleged subpar communication and information sharing between hospitals and debt collectors, leaving patients to prove they did not owe the debt.
“Nonprofit hospitals might partner with financial institutions to offer medical financing products because they perceive that enrolling patients in these products enables them to get compensated for bills via collections practices that would otherwise be prohibited by Internal Revenue Service regulations,” according to the bureau. “As a result, debt collectors end up pursuing patients for these bills even when the bills should never have been incurred in the first place.”
The CFPB received more than 1,700 rental debt complaints in the last five months of 2023. There is more than $9 billion in estimated rental debt in the United States, with more than 4.5 million households behind on rent payments.
Rental debt collectors frequently charge collection fees in addition to the unpaid rent amount, according to the CFPB. Debt collectors allegedly supply rental debt to credit reporting companies to collect debt through coercion.
Rapid rises in rent have been caused by illegal price-fixing, according to the bureau. Landlords and management companies have used revenue management software to collect improper amounts that eventually end up in debt collection.
“Renters, as well as landlords, have complained to the CFPB about rental junk fees, including fees from rental payment processing servicers added onto and required as a condition for rent payment,” according to the bureau. “It is often not clear whether these fees are allowed under the lease agreement or local law, and, thus, able to be targeted by debt collectors.”
