The Consumer Financial Protection Bureau (CFPB) recently took action against Commonwealth Financial Systems, a medical debt collector based in Dickson City, Pa. The CFPB has ordered the company to cease its operations and pay a penalty of $95,000. This decision was made due to Commonwealth’s illegal attempts to collect unverified medical debts.
As a result of this enforcement action, Commonwealth is now prohibited from participating in any debt collection activities, debt buying, debt selling, and consumer reporting activities. The CFPB’s intervention was prompted by numerous consumers disputing the validity of the debts collected by Commonwealth Financial Systems.
The violation lies in Commonwealth’s failure to conduct reasonable investigations of the disputed debts as required by the Fair Credit Reporting Act. Additionally, the company also tried to collect these disputed debts without providing any substantiating documentation. This behavior is strictly condemned by the CFPB.
It is troubling to note that an excessive number of Americans are being targeted by collection agencies for medical bills that often suffer from inaccuracies in reporting. Recognizing this issue, the CFPB is currently engaged in a rule-making effort to address and rectify the problem by removing medical debt from credit reports.
The enforcement action taken by the CFPB against Commonwealth Financial Systems is a crucial step towards protecting consumers’ rights and ensuring fair practices in the debt collection industry.