Recently the Consumer Financial Protection Bureau (CFPB) shut down Commonwealth Financial Systems, a medical debt collection company, for illegal debt collection practices.
The press report from the CFPB outlines how Commonwealth violated the Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA), two laws that protect the rights of consumers. Commonwealth violated the FDCPA by failing to have adequate documentation of the debt, and it violated the FCRA by failing to adequately reinvestigate debts that consumers disputed.
It's important for consumers to know about the substantive protections available under the FDCPA and FCRA. Debt collectors have the burden of proof in any action to collect a debt, and if a debt collector makes a false or misleading statement to a consumer in an attempt to collect a debt, it might violate the FDCPA, which could entitle the consumer to compensation. Under the FCRA, any furnisher of information to a credit reporting agency - which includes debt collectors if they report an account to a credit reporting agency - is required to conduct a reasonable investigation into an account if a consumer disputes it with a credit reporting agency. Failure to do so violates the FCRA and could entitle a consumer to compensation.
More information from the action taken by the CFPB can be found here.
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