Medical debt, back rent and fraud: Consumer issues rose with the pandemic

Collaborator: Streetlight
Published: 06/03/2021, 7:32 PM

Written By: Mollie Bryant and Josh Wallace

(NATIONAL) As the country grappled with the covid-19 pandemic last year, more Americans found errors in their credit reports and experienced debt collection issues, like harassment, federal data shows.

In 2020, the Consumer Financial Protection Bureau (CFPB), a government watchdog agency that regulates financial services, received more than 542,000 complaints from consumers, a 54% increase from the year before.

About 82,700 of those were debt collection complaints, up about 10% from the year before. Nearly half of those complaints claimed a company had attempted to collect debt the consumer didn’t owe.

According to a CFPB analysis of the data, the agency received more complaints per capita from consumers who live in counties mostly made up of people of color. reviewed dozens of the 32,100 complaints CFPB received last year that specifically mention the pandemic. Some show that consumers had trouble disputing debts with collection agencies and credit bureaus that were working remotely. Unemployed workers reported harassment from collection agents, sometimes stemming from debts they didn’t owe.

A complaint filed in Florida against Portfolio Recovery Associates in May 2020 said the company started calling “non-stop” since the pandemic, “and even yelled and screamed at me stating that they are going to sue me and involve law enforcement if I do not pay a debt that I keep explaining to them that I do not owe.” Threatening consumers with arrest violates the Fair Debt Collection Practices Act.

Another Florida complaint filed the same day against a payday loan company said that because of the pandemic, they had lost hours at work and couldn’t make payments. According to the complaint, the consumer received two warnings at their job because agents kept calling them at work.

In July, a consumer in Illinois filed a complaint against collection law firm Blitt and Gaines, alleging the firm had sued them for a debt the company couldn’t legally collect. After the case was dropped, the firm sued the consumer again over a different debt, the complaint said, and the company would not provide evidence that the debt was owed.

“I am currently out of work due to covid, and they are causing me great distress,” the consumer wrote. “This is mental abuse, at this point, and judging by the comment of the last rep I spoke with, they do not intend to stop.”

In the wake of these issues last year, the CFPB under the Trump administration created two rules that consumer advocates say favor the interests of the debt collection industry over those of consumers. In April, the CFPB postponed both of the rules, one of which would allow collection agents to contact consumers up to seven times per week for each debt they owe.

“I think, in our eyes, it’s an industry that is infamous for hounding consumers,” said Rachel Gittleman of the Consumer Federation of America. “This gives a green light to do exactly that.”

Medical debt and back rent

Debts don’t enter collection immediately after financial hardship, but some consumer advocates believe CFPB’s complaints rose as many Americans lost their jobs and strained to meet their financial obligations.

“So we’ve seen the amount of people owing money and the amount of people who cannot afford to pay that back immediately just grow exponentially during the pandemic, and now we all have to prepare for how we come out of this affordably, whether it’s our rent, mortgage or credit card bills, and that is a great challenge,” said Ruth Susswein, deputy director of national priorities for the advocacy group Consumer Action.

Medical debt rose during the pandemic from covid treatment and other costs faced by workers who lost health insurance coverage with their jobs.

And Americans who have struggled to make rent payments since last year also owe their landlords money. A recent survey from the US Census Bureau estimates about 7 million Americans are behind on their rent or mortgage payments or doubt they can make their next payment on time.

“This is potentially going to be an issue that we see down the road in debt collection if landlords decide to pursue back rent that people couldn’t pay during the pandemic through debt collection,” said April Kuehnhoff, staff attorney for the National Consumer Law Center. “I think that there are ways that this may pursue consumers for a long time to come.”

During the pandemic, some types of loans were eligible for relief, while others weren’t. For instance, payments and interest on federal student loans have been suspended since March 2020, while similar protections from private lenders required borrowers to seek them out and weren’t guaranteed. Consumers may have been unaware of which debts were automatically put in forbearance and had trouble navigating a complex system.

“We know that a lot of folks did not have savings going into this national emergency, and although there was a lot of help that was provided by the federal government and state governments throughout the country, … there were not necessarily accommodations provided for all consumers,” Gittleman said.

CFPB received more complaints per capita from Florida than any other state. Donald A. Yarbrough, a Fort Lauderdale, Florida attorney focused on debt cases, said his clients have seen more collection activity since last year, from letters and phone calls to lawsuits.

“So you have the traditional disturbances that people have in their lives, and on top of that, you have this pandemic, with widespread unemployment and illness,” Yarbrough said. “We’ve had a number of clients that have contracted covid and, of course, they were unable to work as a result of that.”

When companies sue to recover debts, they usually are armed with attorneys, but most consumers who are sued can’t afford a lawyer,creating a power imbalance in courtrooms. For anyone who isn’t a lawyer, remote hearings that courts have relied on during the pandemic can be daunting.

“These hearings sometimes are conducted en masse, and they’re very lengthy,” Yarbrough said. “A person that is low-income might not have the ability to arrange for appearance by Zoom and then would be forced to only appear as a disembodied voice on the end of a phone line.”

People sued in debt collection cases tend to not appear in court.

“Then the real trouble starts, because a judgment will be entered against them almost immediately for the full amount of the debt, and then their wages and any bank accounts (they have) will be subject to garnishment,” Yarbrough said.

Advocates and government watchdogs have warned consumers since last year that fraud and other scams could rise during the pandemic.Susswein said fraud played a big role in the rising debt collection complaints.

“It’s always gone on, but it has expanded during the pandemic,” she said. “Along with actual fraud comes identity theft, … and that’s where you can end up with a huge amount of inaccurate information in your credit file and complaints about it.”

Susswein recommended that victims of identity theft place a security freeze on their credit records to prevent anyone from opening an account in their name.

“That is the only real protection, and you don’t have to wait until you’ve been defrauded,” Susswein said. “Fortunately, we can all put a security freeze on our credit files, and we should.”

How working from home is changing debt collection

Like many others, the collection industry transitioned to remote work last year, a move that some critics argue leaves agents unsupervised and consumers at heightened risk of predatory practices.

Collectors told CFPB last year that they had partially or completely transitioned to remote work, and in a TransUnion and Aite Group survey of people working in the debt collection industry in 2020, two-thirds said their company allowed remote work.

According to information compiled by the National Consumer Law Center, at least 18 states began allowing collection agency employees to work from home during the pandemic. Sixteen of those policies remain in place, and at least two states, Idaho and Washington, will allow collection agents to work from home for the rest of the year or longer.

“I think there are certainly questions about whether supervision was adequate during the pandemic for debt collectors who were working remotely,” Kuehnhoff said. “How have the debt collection agencies replicated supervision, either by listening in on the calls that are being made remotely or using software?”

A post from ACA International, a trade group that represents the collections industry, said that remote work increased agencies’ productivity, but it also made meeting state requirements more challenging. The post recommended agencies use call recording systems to listen to calls that can’t be observed in person.

In the TransUnion and Aite survey of the debt collection industry, 59% of respondents said they use call recording technology.

Credit reporting issues dominate consumer complaints

In 2020, consumers filed about 319,300 complaints regarding credit reports, making up 59% of the complaints CFPB received last year.

During the pandemic, consumers could view their credit reports for free every week instead of once a year, and that increased access may have led to more complaints.

Ed Mierzwinski, senior director of the Federal Consumer Program at the US Public Interest Research Group, said consumers began following their credit reports more closely and found that they had been negatively impacted by debts they were not aware of.

“It has always been a nightmare to deal with it, but the pandemic is the catalyst for the massive increase in complaints, because people want their credit report to be accurate,” Mierzwinsky said.

The biggest issues with credit reports, both before and during the pandemic, are incorrect information and credit bureaus failing to address problems with reports, Susswein said.

Debt collectors sometimes engage in “debt parking,” where they report debts to credit reporting agencies before attempting to reach out to the consumer, a practice that can have far-reaching consequences. These tactics can affect a person’s ability to take out a loan or find housing, and data shows debt parking disproportionately affects people of color, said Kiran Sidhu, policy counsel for the Center for Responsible Lending.

In complaints to the CFPB, consumers often said that dings to their credit scores from unknown debt affected their ability to rent or obtain a mortgage.

Working to resolve consumer complaints

At the Wisconsin Department of Financial Institutions, Michael Lawton works to help mediate disputed debt on behalf of consumers who file complaints with the agency. He said that last year, the department actually received fewer complaints than the year before.

“That really was sort of a shock to us,” Lawton said.

He said companies often agree to strike consumers from their calling lists if they can’t prove the debt is legitimate. For debts that are owed, Lawton said creditors typically work with the consumer and offer some type of resolution, such as decreasing the amount owed or creating a payment plan.

Lawton said some companies harass consumers to pay debts they don’t owe.

“Some of those cases, we can’t even figure out how they would have even gotten the consumer’s information to begin with,” he said. “These scam artists will just call and badger. They’ll make threats like, ‘If you don’t pay this tomorrow, the sheriff is going to be at your doorstep.’”

Such threats are illegal, and Lawton said in those cases, his agency focuses on educating the consumer and assuring them that they are not going to be arrested.

“Don’t talk to them,” he said. “Let your family know that if you get a call that it’s a scam and just to hang up on them. If we can do that, that’s winning the battle sometimes.”

Mollie Bryant, editor of, can be reached at 405-990-0988 or Follow her on Twitter.

Josh Wallace is a freelance writer based in Oklahoma City. He was previously a staff writer for The Oklahoman.

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