Agency shutters medical debt collector after consumers complained about unverified bills

Alleged illegal attempts to collect unverified medical debts after consumers disputed their validity spurred the federal consumer financial protection agency to close down a bill collector and fine it $95,000, the agency said Friday.

According to the Consumer Financial Protection Bureau (CFPB), the action against Commonwealth Financial Systems of Dickson City, Pa. — a third-party debt collector that specializes in the collection of past-due medical debts and furnishes information about consumer collection accounts to consumer reporting companies – violated the Fair Credit Reporting Act (FCRA). CFPB said the firm violated FCRA by failing to conduct reasonable investigations of disputed debts and failed to inform consumer reporting companies that certain information was being disputed.

CFPB also alleged that Commonwealth also violated the Fair Debt Collection Practices Act (FDCPA) because it continued to attempt to collect disputed debts without substantiating documentation.

The bureau said that, under its order, Commonwealth is banned from participating in or assisting others in any debt collection activities, debt buying, debt selling, and consumer reporting activities. The firm must also request all consumer reporting companies to whom it previously furnished information about any consumer to delete all collection accounts for such consumers. It is also obligated to pay the $95,000 fine, the bureau said.

CFPB Shuts Down Commonwealth Financial Systems for Illegal Debt Collection Practices