CFPB: Consumer Credit Report Study

The Consumer Financial Protection Bureau recently published a study concerning the reporting of medical and non-medical debt on consumer credit reports.

Some of the pertinent highlights of the study are:

  • Information from recent studies of credit report accuracy and from other sources raise particular concerns about the accuracy and interpretation of collections tradelines, the vast majority of which are furnished by debt collection agencies and debt buyers.
  • [C]ollections tradelines appear on the credit reports of almost one third (31.6 percent) of consumers.
  • There are no objective or enforceable standards that determine when a debt can or should be reported as a collections tradeline.
  • Medical debts comprise roughly half (52 percent) of the collections tradelines that appear on consumer credit reports. Medical debts occur and are collected through unique circumstances and practices that amplify concerns raised about collections tradelines generally. In particular, the complexity of medical billing and the third-party reimbursement processes faced by most patients and their families is a potential source of confusion or misunderstanding between patient, medical provider, and insurer. That complexity could lead some consumers to be unaware of when, to whom, or for what amount they owe a medical bill or even whether payment was the responsibility of the consumer rather than an insurance company.
  • Almost one out of every four consumers (24.5 percent) has one or more non-medical collections tradelines.
  • Industry interviews have suggested that some collectors employ a strategy of “passive collections” that involves reporting a debt in collections to the NCRAs and simply waiting for the consumer to discover the tradeline (rather than actively seeking to collect from the consumer). A collector may be most likely to resort to this tactic when the amount owed on a collections account is small. Small dollar accounts are most often observed for telecommunications, utility, and medical accounts. Attempts to make direct contact with the consumer via mail or telephone to collect may not be cost efficient based on the odds of recovery and the amounts recovered.