News Release


Danny Katz,
CoPIRG Foundation

New Report: Medical Debt Collectors Often Target Wrong Person

Colorado Ranks 7th Nationally for Most Complaints Per Capita
For Immediate Release

A new report finds that nearly two-thirds of the complaints about medical debt collection in the Consumer Financial Protection Bureau (CFPB)’s complaint database assert either that the debt was never owed in the first place, it was already paid or discharged in bankruptcy, or it was not verified as the consumer’s debt. 

The report comes as the Colorado Senate considers SB17-216, the Colorado Fair Debt Collection Practices Act, which would push debt collectors to do a better job of verifying they are collecting debt on the correct person before they pursue it. 

According to the report from the CoPIRG Foundation and the Frontier Group, Colorado ranked 7th nationally for the most medical debt collection complaints per capita.  

“Complaints submitted to the CFPB suggest that many consumers contacted about medical debt should not have been contacted in the first place – the information was wrong,” said Danny Katz, the Director of CoPIRG Foundation. “If you collect debt, it should be from the right person for the right amount. Too often, that is not happening and that needs to stop.”

The report focused on medical debt because it accounts for more than half of all collection items that appear on consumer credit reports and is a major source of problems for consumers, since medical debt items on credit reports are often wrong or about the wrong consumer. Recognizing medical debt is both often mistaken and not a good indicator of future creditworthiness, leading credit score companies have begun to remove it from credit scores, but it still appears in credit reports.

"Medical debt collection is a system run amok," said Gideon Weissman of Frontier Group, report co-author. "Our analysis of CFPB complaint data suggests that many of the consumers facing harassment and damaged credit due to medical debt never owed any money in the first place."

The report analyzed the CFPB’s national complaint database. Key findings of the report “Medical Debt Malpractice,” by the CoPIRG Foundation and the Frontier Group include: 

  • Nearly two-thirds (63%) of 17,701 complaints about medical debt collection reviewed in the report assert either that the debt was never owed in the first place, it was already paid or discharged in bankruptcy, or it was not verified as the consumer’s debt.
  • Colorado ranked 7th nationally for the most medical debt collection complaints per capita. The state with the most complaints per capita is Nevada followed by Florida, Delaware, Georgia, New Jersey, and Maryland.
  • Many complaints document inappropriate and aggressive tactics including frequent or repeated calls, calls harassing friends and family, threats of legal action, or the use of abusive language.
  • Although impacts on credit reports are not categorized by the CFPB, they appear to be a significant source of complaints: 1,810 complaint narratives, or 35 percent of all medical complaint narratives submitted, contain the text “credit report.” 

According to the Federal Trade Commission, debt buyers often have severely limited information about the debts they collect - little more than a spreadsheet listing the name and last known address of the person whose account was purchased, and the amount allegedly owed on the account. The Colorado Department of Regulatory Affairs reports in their 2016 Sunset Review of the Colorado Fair Debt Collection Practices Act that when a debt has been bought and re-sold multiple times, the debt collector “may not be aware of any of the debt’s history, when or where the debt originated or whether the debt has been paid.”

According to the Center for Responsible Lending, debt buyers use litigation to gain leverage against individuals who might not actually owe any money at all, but are unlikely to hire a lawyer to represent them in court or take the time and effort needed to handle the litigation for themselves. In the period 2013 to 2015, four large debt buyers, Encore Capital Group, Portfolio Recovery Associates, Sherman Financial Group, and SquareTwo Financial, alone flooded county courts across Colorado with close to 40,000 lawsuits against Colorado residents. These lawsuits accounted for over 8% of all civil cases filed in county courts statewide.

CoPIRG Foundation and the Frontier Group recommended the following:

  • Stop debt collectors and buyers from collecting debts without proper information and documentation about the debt and records of prior communications with the consumer.
  • Stop debt collectors from bringing robo-signed cases in court.
  • Crack-down on widespread use of threats, harassment and embarrassment in debt collection, and make it easier for the consumer to demand a stop to unwanted communications.
  • Protect servicemembers by strictly limiting contact with their commanders to verifications of address. 

“We’re glad to see the CFPB is using this database to stand up for consumers and hold companies accountable for unfair, aggressive, and illegal medical debt collection. The CFPB has already taken multiple actions against collection companies that break the law while collecting medical debt,” said Katz. “The CFPB is the one national agency working to make financial markets fair for consumers and it should not be weakened.”

In addition, earlier in the week, Colorado also took action when the Colorado Senate Judiciary Committee passed SB17-216 unanimously. The bill is sponsored by Senator Bob Gardner and Representatives KC Becker and Susan Lontine and took its first step in the legislative process. The bill would renew the Colorado Attorney General’s authority to watchdog debt collection agencies in the state and would decrease the times debt collectors and buyers collect debts without proper information and documentation about the debt.

To read stories from Colorado consumers who submitted complaints go HERE.

Support us

Your tax-deductible donation supports CoPIRG Foundation's work to educate the public on the issues that matter, especially when powerful special interests are blocking progress.

Learn More

You can also support CoPIRG Foundation’s work through bequests, contributions from life insurance or retirement plans, securities contributions and vehicle donations.