A medical debt collector that in “at least thousands of times” continued efforts to collect on debt that was not substantiated after a consumer disputed the debt’s validity must pay redress plus a $1.675 million civil money penalty under an order issued Thursday by the Consumer Financial Protection Bureau (CFPB).
The bureau said the firm, Phoenix Financial Services, is a third-party debt collector with its principal place of business in Indianapolis, Ind. It collects primarily past-due medical debts, the CFPB said, and furnishes information about consumers to consumer reporting companies.
Between January 2017 and December 2020, Phoenix received approximately 54.4 million accounts with allegedly outstanding and owed debts from its clients for collection, the bureau said. It said Phoenix violated the Fair Credit Reporting Act (FCRA) and its implementing Regulation V; and the Fair Debt Collection Practices Act (FDCPA).
Specifically, it said Phoenix violated the FCRA and Reg V by:
- failing to establish and implement reasonable written policies and procedures regarding the accuracy and integrity of information it furnishes to consumer reporting agencies (CRAs);
- failing to conduct reasonable investigations of consumer disputes about information Phoenix furnished to CRAs; and
- failing to report the results of direct dispute investigations to consumers.
It said Phoenix violated the FDCPA by:
- sending debt collection letters to consumers before providing the consumer a verification of the debt when Phoenix had received a written dispute from the consumer within 30 days of the consumer’s receipt of a debt validation notice; and
- by misrepresenting to consumers that they owed alleged debts in certain circumstances when Phoenix lacked a reasonable basis to make those representations.
The CFPB said Phoenix is required under the order to provide redress to affected consumers by refunding all amounts paid to Phoenix on an unverified debt between January 1, 2017, and the date of the order by consumers who received an unlawful debt collection letter from Phoenix after disputing the validity of the alleged debt. It also requires Phoenix to abide by certain conduct provisions to prevent it from engaging in the violations found by the bureau and to pay a $1.675 million civil money penalty.