The Consumer Financial Protection Bureau today announced that a medical debt collector — Commonwealth Financial Systems in Pennsylvania — is being shut down for failing to conduct reasonable investigations and failing to inform the credit reporting agencies that debts were being disputed by consumers.
What It’s Accused of Doing: In the consent order, the CFPB said that the company does not have any documentation supporting the debts it was collecting on and had insufficient data for investigating certain types of disputes. When investigating disputes, the company relied on data it received from its clients, which it did not verify as accurate.
- When investigating indirect disputes, the company’s policies and procedures instructed agents to match just one data point in its system to resolve the dispute or, for certain indirect disputes, to delete the tradeline without conducting any investigation at all. Agents were instructed to resolve disputes using the following instructions: “Glance over information populated. Check to see that Social Security number matches. If Social Security number is completely different delete tradeline.”
- The CFPB noted in the enforcement order that matching Social Security numbers would not be effective at helping determine instances of identity theft where the Social Security number would match, but other data would not.
- Matching Social Security numbers would also be insufficient to conduct reasonable investigations in instances of disputes related to account balances, past settlements, or bankruptcy, the CFPB noted.
- “For these types of disputes, Respondent’s instruction to merely check the consumer’s Social Security number is effectively an instruction to not perform any investigation at all,” the CFPB wrote in the Consent Order.
- The company was also accused of not having enough dispute-handing agents. In many cases, agents were often handling hundreds of disputes per day. On one day in 2021, one agent responded to 1,052 disputes — spending less than 30 seconds per dispute, on average.
- The CFPB also found that the company would continue to try and collect on accounts where the debt had been disputed by the consumer without obtaining substantiation of the debt.
What the CFPB Did: The company is banned from participating in or assisting others in debt collection activities, debt buying, debt selling, and credit reporting activities.
- The company must also ask all credit reporting agencies to delete all of its collection acccounts.
- The company must also pay a fine of $95,000 to the CFPB.
