CFPB Shuts Down Medical Debt Collection Agency Over Several Violations

CFPB says the collection agency's violations included trying to collect unverified medical debts.

A consumer protection law book lays on a table with a gavel next to it.
(Image credit: Zerbor, Getty Images)

The Consumer Financial Protection Bureau (CFPB) has ordered medical debt collection agency Commonwealth Financial Systems to cease operations and pay a $95,000 fine for illegally trying to collect unverified medical debts.

The CFPB said that Commonwealth, which specializes in collecting past-due medical debts and informs consumer reporting companies about consumer collection accounts, violated the law in several ways, These include a failure to conduct reasonable investigations after consumers disputed debts, a failure to inform consumer reporting agencies about disputes, and continuing to attempt to collect disputed debts without documentation proving the debts.

As a result of the violations, the CFPB has ordered Commonwealth to:

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  • Shut down permanently: Commonwealth is now banned from participating in any debt collection activities, debt buying, debt selling and consumer reporting activities.
  • Tell consumer reporting companies to delete all information: Commonwealth must request that all consumer reporting agencies that it has informed about any consumer to delete all collection accounts for the consumer.
  • Pay the $95,000 fine into to the CFPB’s victims relief fund.

Commonwealth did not immediately respond to a Kiplinger request for comment.

The consumer watchdog

Commonwealth is the second company the CFPB has ordered to shut down in the last two months. In November, the agency and 11 states ordered online vocational training firm Prehired to shut down and provide more than $30 million in relief over its illegal student lending practices.

“Prehired lured student borrowers into debt with false promises of job placements and claims that students wouldn’t have to pay until they got a job,” CFPB Director Rohit Chopra said in a November 20 statement. “Today’s action with our state partners ensures that borrowers harmed by Prehired can receive redress and have their illegal loans canceled.”

The CFPB encourages people to submit complaints about financial products or services. The agency says that it sends 25,000 of these complaints weekly to companies for response and, if another agency would be better able to assist, it will send the complaints to them and let you know.

You can submit a complaint at CFPB’s website or call (855) 411-2372 or TTY/TDD (855) 729-2372.

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Joey Solitro

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.