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CFPB Takes Action Against Debt Collection Law Firms

Thu 19 Jan, 2017  /  by McIntyre & Lemon  /   Client Alerts

01/19/17 – The CFPB is taking action against two medical debt collection law firms for allegedly falsely representing that letters and calls were from attorneys attempting to collect on a debt when no attorney had yet reviewed the account.

The Oklahoma-based firms primarily collect medical debt on behalf of hospitals, doctors, and other healthcare providers in the state of Oklahoma. Annually, the firms attempt collection on approximately 700,000 debts totaling more than $500 million. Like many other debt collectors, the firms collect delinquent accounts and are paid based on how much money they collect.

The CFPB’s investigation found that the firms engaged in illegal debt collection practices. Their standard practices implied lawyers were reviewing the veracity of a consumer’s medical debt when no lawyer had, in fact, reviewed the file. The CFPB order charges the defendants with violating the Fair Debt Collection Practices Act and the Fair Credit Reporting Act from January 2012 to August 2016. Specifically, the CFPB found that collectively the defendants:

  • Sent collection letters implying they were from a lawyer;
  • Called consumers and implied a lawyer was involved;
  • Falsified notarization of affidavits in lawsuits against consumers; and
  • Furnished information to a credit reporting company without policies to ensure accuracy.

Under the consent order, the Bureau is requiring the law firms to provide $577,135 in relief to harmed consumers, correct their business practices, and pay a $78,800 penalty to the CFPB’s Civil Penalty Fund.

CFPB Press Release, Consent Order.