On June 8, 2023, the CFPB took action against medical debt collector Phoenix Financial Services (Phoenix) for numerous debt collection and credit reporting violations. According to the CFPB, Phoenix continued to attempt to collect on debts that were not substantiated even after consumers disputed the validity of the debt.
From CFPB Director Rohit Chopra’s statement:
“With medical debt looming over so many American families, we are taking action against companies seeking to illegally profit off patients. Given widespread inaccuracies in medical billing and credit reporting, the CFPB will be working to ensure that patients are not coerced into paying debts that they do not owe.”
Phoenix is a third-party debt collector, wherein it collects primarily past-due medical debts, and furnishes information about consumers to consumer reporting companies. Based on the CFPB’s investigation, Phoenix sent collection letters to consumers who had disputed the validity or accuracy of their purported debts, even though Phoenix had not obtained substantiation for the debts. The CFPB said that Phoenix’s sending of unlawful debt collection letters risked harming consumers by pressuring or inducing them to pay debts they did not owe. The CFPB also found that Phoenix furnished debt information to consumer reporting companies.
Phoenix has been found to have violated the Fair Credit Reporting Act and its implementing Regulation V by neglecting to conduct reasonable investigations of consumer disputes and failing to establish reasonable written policies and procedures regarding the accuracy and integrity of the information it provided to consumer reporting companies. Additionally, Phoenix violated the Fair Debt Collection Practices Act by utilizing false and deceptive methods for debt collection, and not halting collection efforts after receiving notification from consumers of disputed debt collection claims. In light of these allegations, the CFPB ordered Phoenix to:
Cease unlawful collection and credit reporting practices, and establish policies and procedures to ensure that it conducts reasonable investigations of disputes about information furnished to consumer reporting companies;
Cooperate with CFPB examinations for the duration of the order;
Provide redress to consumers who received an unlawful debt collection letter from Phoenix after disputing the validity of an alleged debt; and
Pay $1.675 million in penalties to the CFPB.
Read the CFPB’s press release here.
The consent order can be found here.
