The debt collection sector has a long history of abusive and deceptive practices against consumers, but harassing hospital patients waiting in an emergency room or recovering from surgery - this is a new low even for the most abusive debt collectors. The Minnesota Attorney General Lori Swanson’s recent lawsuit against Accretive Health Inc., the Chicago-based medical debt collection company, gained national attention last week with the release of a six-volume report detailing allegations of debt collectors misusing private patient information and coaching employees to aggressively collect debt in hospitals. The report also claims that many patients were led to believe that the debt collectors were hospital employees and that they wouldn’t get proper care unless they paid up. Swanson ‘s lawsuit accuses Accretive of violating state and federal health privacy laws, debt collection laws, and consumer fraud laws.
Several members of Congress publicly expressed outrage about Accretive’s behavior and Minnesota Senator Al Franken and California Congressman, Pete Stark are launching investigations into the matter. Is there a role for the Consumer Financial Protection Bureau (CFPB) to investigate these types of allegations? The CFPB recently proposed a rule to include debt collectors under its nonbank supervision program. Currently the CFPB has the authority to write new rules under the FDCPA and enforce the law against abusive and deceptive debt collectors. This proposed rule would mark the first time that this industry would be subject to federal supervision.
Under the proposed rule, debt collectors with more than $10 million in annual receipts from debt collection activities would be subject to supervision. Accretive had a net income of $29.2 million in 2011. According to the rule, you would assume Accretive would qualify as a “larger participant.” However, the consumer debt taken under consideration does not include medical debt.
On April 17th, NACA submitted comments to the CFPB regarding proposed regulation to supervise “larger participants” in consumer debt collection and consumer reporting markets. NACA proposed to the CFPB to define “larger” broadly so that the CFPB has the flexibility to examine a range of entities that may pose different risks for consumers. We also believe the examination should take in account all of debt collector’s operations including medical or other nonfinancial products.
Effective compliance not only requires enforcement and regulation but also supervision of “larger” debt collectors. The flexibility of supervisory and examination authority enables the CFPB to obtain the information it needs about operational issues and emerging threats to write well-informed, effective, and timely rules and meaningful enforcement actions over debt collectors. Perhaps if the CFPB had this broad oversight authority this type of egregious behavior could be prevented.
-Written by Ellen M. Taverna, Legislative Associate at the National Association of Consumer Advocates (NACA)