News
CFPB Shuts Down Commonwealth Financial Systems for Illegal Debt Collection Practices
WASHINGTON DC – The Consumer Financial Protection Bureau (CFPB) today took action against a medical debt collector, Commonwealth Financial Systems, for illegally attempting to collect unverified medical debts after consumers disputed the validity of the debts. According to the order issued today, the company will cease operations and pay a $95,000 fine to the CFPB’s Victim Relief Fund.
Commonwealth Financial Systems is a non-bank company headquartered in Dickson City, Pennsylvania. Commonwealth is a third-party debt collector that specializes in collecting past-due medical debt and provides consumer billing account information to consumer reporting companies.
The Commonwealth’s actions violated the Fair Credit Reporting Act because the company failed to conduct reasonable investigations of disputed debts and failed to inform consumer reporting companies that certain information was being disputed. The Commonwealth also violated the Fair Debt Collection Practices Act because it continued to attempt to collect disputed debts without supporting documentation.
Enforcement action
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against entities that violate consumer financial protection laws, including the Fair Credit Reporting Act and the Fair Debt Collection Practices Act. Under the CFPB order, the Commonwealth must:
- Permanently turn off: Commonwealth is prohibited from participating in or assisting others in any debt collection, debt purchasing, debt selling, and consumer reporting activities.
- Tell consumer reporting companies to delete all information: The Commonwealth must request all consumer reporting companies to whom it has previously provided information about any consumer to delete all billing accounts of such consumers.
- Pay a $95,000 fine: Commonwealth will pay a $95,000 fine to the CFPB Victim Relief Fund.
Tens of millions of people are pursued by debt collectors for medical bills, and the CFPB has described significant evidence, including reports from consumers themselves, that the collection, provision and reporting of medical bills is rife with inaccuracies. Thus, the CFPB has taken numerous actions on the issue of medical debt. In November, the CFPB issued a report highlighting the challenges American families face when debt collectors chase allegedly unpaid medical bills. In September, the agency began a regulation to remove medical debt from credit reports. Together with the US Department of Health and Human Services and the US Treasury Department, the CFPB launched a investigation on expensive credit cards and loans given to patients to pay for healthcare costs. Also in June, the CFPB made a decision enforcement action against Phoenix Financial Services for illegal medical debt collection and credit reporting practices.
Read about the CFPB’s rules for removing medical commercial lines from consumer reports.
Consumers can lodge complaints about financial products and services by visiting the CFPB website or by calling (855) 411-CFPB (2372).
Employees who believe their companies have violated federal consumer financial protection laws are encouraged to submit information about what they know to whistleblower@cfpb.gov. To learn more about how to report potential misconduct in the industry, visit the CFPB website.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer financial laws and ensures that markets for consumer financial products are fair, transparent and competitive. For more information visit www.consumerfinance.gov.