Halloween is right around the corner, so we decided to round up something spectacularly scary: medical debt collection horror stories! This isn’t the first time we’ve featured examples of bad apples (read more here), but we wanted to focus on the medical debt collection industry in particular this time. Why is that? Well, medical debt can be a touchy subject, and CFPB oversight of medical collection agencies is slightly different than for others - namely the exception of the $10 million revenue threshold for Larger Market Participants. While many medical collection agencies may think this means they are not subject to CFPB oversight, that is simply not the case. If a medical collection agency of any size is found to have violated the FDCPA (Fair Debt Collection Practices Act) or FCRA (Fair Credit Reporting Act), then the CFPB may appropriately enforce punishment.
So, let’s take a look at three companies who deserve tricks rather than treats this Halloween...
In June of this year, Syndicated Office Systems, LLC was fined $500,000 and must pay more than $5 million in relief to consumers who were harmed by their practices. As a medical debt collection agency, the CFPB asserted oversight because SOS had violated both the FDCPA and FCRA by not sending debt validation notices and mishandling consumer credit report complaints. It was established that SOS did not have any policies in place that would protect the rights of debtors, and they must now develop those policies as a result of CFPB action.
Also in June 2015, the Pennsylvania Attorney General filed suit against Hamilton Law Group and its president, James Havassy. The firm, which acts as a medical debt collector, was sending letters to family members to collect on debts they were not liable for. This was done using a centuries-old statute called the ‘Familial Responsibility Law’, but it disregarded two important points: the actual debtor must be indigent, and the allegedly responsible family members must have the ability to pay. Havassy and Hamilton Law Group did not attempt to prove either of these points in multiple cases, and have been sent a cease-and-desist letter.
Springstone Financial, LLC is not a medical debt collection agency, but the CFPB nonetheless slapped them with a $700,000 judgment this August (to be paid back to consumers). Essentially, Springstone was offering “interest-free” loans to consumers who needed dental work done, but the loans were actually deferred interest...meaning consumers would be paying almost 23% interest after the promotional period was over! The CFPB found that the employees and providers who were marketing the loans misled consumers, whether deliberately or as a function of poor training.
After reading these examples, it might be easy to cast the whole debt collection industry in the same negative light, but that would simply not be accurate or fair. In fact, even the large number of complaints that the CFPB records is not a great indicator of the debt collection industry as a whole. That being said, when looking to send accounts receivable to collections, make sure you’re choosing a reputable company. Contact us today to see how NSB can assist your business!