In a recent speech at the National Consumer Law Center/National Association of Consumer Advocates Spring Training, Seth Frotman, General Counsel of the Consumer Financial Protection Bureau (CFPB or Bureau), focused on medical billing and collections and tenant screening and debt, emphasizing the CFPB’s enforcement of the Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA) in these areas.

Medical Collections and Consumer Reporting

According to Frotman, as healthcare costs rise families are being burdened with medical bills that they should not or do not owe. The CFPB has purportedly received over 15,000 complaints about debt collectors pursuing unpaid medical bills in the past two years. Frotman emphasized that debt collectors are strictly liable under the FDCPA for any misrepresentations they make about whether and how much a consumer owes. Additionally, a debt collector violates the FDCPA if they collect an amount that is no longer correct, such as when an insurance company or patient has made a payment on the bill.

The CFPB is also focused on the issue of medical bills appearing on credit reports. The Bureau has initiated a rulemaking process, discussed here, to remove medical bills from credit reports used by creditors as a matter of federal law.

Rental Collections and Consumer Reporting

Frotman also discussed the collection and reporting of unpaid rent. According to Frotman, as corporate landlords have increased their rental holdings, demand has substantially increased for “tenant screening” products that perform digital, algorithmic scoring of prospective tenants. The CFPB has purportedly received complaints from renters about inaccuracies and errors on tenant screening reports that have a long impact on their housing opportunities.

As discussed here, the CFPB recently issued an advisory opinion on background screening emphasizing that consumer reporting agencies, including those offering tenant screening products, must under the FCRA maintain reasonable procedures to avoid producing reports with false or misleading information.

The CFPB has also seen debt collection activity related to rental debt increase substantially over the last several years. The CFPB is monitoring debt collection and consumer reporting complaints involving rental-related activity. The CFPB has emphasized that the FDCPA applies to the collection of residential rental debt by debt collectors, including by attorneys. Thus, law firms can be held liable under the FDCPA if they approve eviction actions without performing a meaningful review of each case. Additionally, according to Frotman, debt collectors acting on behalf of landlords may violate the FDCPA by collecting amounts that are inflated by fees that are not owed as a matter of state law. He gave the example that landlords may improperly charge tenants for basic repairs and routine upkeep that should be the landlord’s financial responsibility under the warranty of habitability in most states. These amounts may then improperly end up in debt collection actions subject to the FDCPA or on credit reports.

Frotman concluded his remarks by encouraging the attendees to tell the Bureau about their cases in this area. “The CFPB has an active amicus brief program. And we rely on monitoring of active litigation to bring to our attention emerging issues and areas of concern.”

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