CFPB To Medical Debt Collectors: You’re Fired!

Earlier this month, the CFPB released a final “interpretive rule” wrongly disguised as an Advisory Opinion announcing new FDCPA standards only for medical debt collectors.  

The new rules, which per the Bureau has the force of law, create operational and compliance challenges at different levels than previously seen. We believe that full compliance with the new rules would force debt collectors to stop collecting medical debt facing regulatory or litigation risks.

The new obligations are effective December 3, 2024.

As of December 3, to satisfy the Bureau’s standards, medical debt collectors must:

• Substantiate a medical debt before initiating any collection activity. By “substantiation,” the CFPB requires the medical debt collector to have a reasonable basis in the form of documentation by knowing “that the specific amount demanded is due and legally collectible.”
• Take independent steps to verify that the balance placed by a medical provider is legally correct and is not subject to credits or discounts due to federal or state laws, e.g., state workers’ compensation laws, the No Surprises Act, or the provider’s financial assistance policy or charity care.
• Ensure that the amount charged by the provider is not “unconscionable” under state law. Medical debt collectors must now verify that the amount being collected reflects an amount that can be recovered per a contract, or as the fair market price for the treatment, service or device provided to the consumer as established by state law and not just what the provider charged.  
• Not represent to consumers that a balance stated is the final or precise amount due when there is no enforceable contract signed or acknowledged by the consumer with a definitive price.
• Take independent steps to ensure that the consumer is being billed only for services that were provided, that there is no “upcoding” of the bill done by the provider, and that the medical bill has not already been paid by the consumer or any third-party, i.e., insurance.  

According to the CFPB, the medical debt collector that does not take these steps will be strictly liable for FDCPA and Reg. F violations. At this point, strict liability presumably means medical debt collectors may be sued for any shortcomings by both the CFPB and consumer lawyers.  

Wondering how you can meet these requirements? We are here to help!