The Consumer Financial Protection Bureau released a new report showing that the most common complaint about debt collection was related to attempts to collect on a bill they claimed did not belong to them.
“In medical debt collection complaints this issue makes up almost half of complaints and, important, complaint volume about that topic has been increasing,” said the federal agency. They noted that such bills often end-up on people’s credit reports, forcing them to go through a bureaucratic process to clear their financial records.
The CFPB discovered that between 2018 and 2021, public complaints regarding collection efforts for medical bills consumers claimed they didn’t owe jumped 31%. Federal data shows that roughly 1 in 5 households in the United States has debts related to healthcare. According to regulators, medical bills are the most frequently reported item on consumer credit reports.
The CFPB said that people also report being informed of an outstanding medical debt only after they experience a decline in credit scores and are told that paying the bill will remove negative collections information from credit reports.
750,000 complaints
According to the CFPB, it received more than 750,000 complaints from approximately 3,400 companies in 2021 for them to examine. Other findings of the agency:
The U.S. median medical debt is $310.
15% of all debt collection complaints in 2021 were related to attempts to collect on a hospital bill.
Many consumers who receive collection notices regarding a medical bill report that they are unfamiliar with the provider.
Consumers report that collection notices can contain large amounts personal medical information.
Many Americans believe they pay medical bills to avoid negative financial and privacy consequences, even though they don’t feel the debt is valid.
Credit reports that show medical bills are more common in communities with more low-income or minority residents, veterans and young adults.
Rohit Chopra, Director of CFPB, stated in a statement that many Americans feel pressured to pay medical bills they have not yet paid or owed. “The credit reporting system shouldn’t be used to coerce patients into paying bills they don’t owe.”
Leading credit rating agencies Equifax, Experian, and TransUnion announced in March that they would begin removing most medical debt from consumer credit reports this summer.
Congress passed the “No Surprises Act” last year to address the issue of runway medical bills. This Act protects people who have health insurance from being billed for emergency care that is not covered by their insurer.
Patients are still responsible for any copays or deductibles they would normally have to pay under their plans, but they will only be charged at their plan’s intranet rate.
