Surprise! Almost no one noticed the No Surprises Act (Act) buried as it was in a 3000-page omnibus spending bill. But it is in effect now. The Consumer Financial Protection Bureau (CFPB) immediately put out a bulletin stating they plan to enforce it. And suddenly, the medical collections industry is in turmoil.
It's a mistake to think the CFPB Bulletin only matters for medical debt covered by the Act. There are implications and lessons here for the entire industry.
The Act was aimed at healthcare billing practices; it created rules for certain types of medical bills and the amounts which can be charged to patients. Although it was not aimed at debt collectors and did not explicitly intertwine with the Fair Debt Collection Practices Act (FDCPA) or Fair Credit Reporting Act (FCRA), the CFPB has stated in no uncertain terms that if a debt collector attempts to collect a debt prohibited by the Act they may face liability under the FDCPA and FCRA. In other words, if a health care provider makes a mistake at the beginning of the billing process, the CFPB expects the debt collector to know that and refrain from collecting the debt.
The rest of the collection industry should take note. Since the FDCPA does not have a substantiation requirement, then what does the CFPB’s bulletin regarding the Act mean? What are debt collectors expected to do for other lines of debt? How can a company protect itself?
The Act may have been written to apply to medical debt, but the law itself and its enforcement by the CFPB have implications for the entire industry. Here are three things you absolutely need to know about the No Surprises Act and what it means for you, whether you're collecting medical debt or not.
1. The speed with which the CFPB jumped on the No Surprises Act was shocking, and it's a clear sign of how enforcement has evolved across collections.
The instant the law went into effect, the Bureau issued its bulletin. Instead of reviewing actions taken by debt collectors over a period of time, the CFPB proactively issued its expectations. What's more, since the law was not aimed at debt collection, it seems the CFPB drafted the bulletin to inform debt collectors that they must confirm balances are correct before contacting consumers (a requirement that does not explicitly exist in the FDCPA). The implication here is that, though the FDCPA does not require substantiation, the CFPB expects debt collectors, which are the last stop on the billing block, to do something more than taking their clients' records at face value.
There is some debate as to whether the CFPB has the authority to enforce the No Surprises Act when the Act does not pertain to debt collection. The takeaway here, though, is that the CFPB thinks it has authority to enforce the Act and presumably will enforce it.
2. Be careful - the No Surprises Act may have wider implications than you think.
Does your agency collect account types other than medical debt? How about a debt buyer or a law firm that manages or purchases debt, medical or otherwise? Here's another surprise for you. This law affects you, too.
Although the CFPB bulletin was aimed at collecting medical debt, the overarching theme here is that the CFPB expects all debt collectors, regardless of their specific role, to take measures to ensure balances sought from consumers and reported to credit reporting agencies are accurate, regardless of account type. It seems the CFPB is signaling that simply relying on client information may not be acceptable.
This position is not new, though it is gaining speed. For example, back in 2019, the CFPB filed a lawsuit against a debt collector, which alleged, in part, that the debt collector should have noticed a high rate of disputes on certain portfolios, which should have alerted the debt collector there was an issue with the accounts. The lawsuit settled in 2021. By issuing this bulletin, the CFPB is signaling its intentions and expectations of all debt collectors.
There has been some discussion about whether or not the CFPB properly issued the Bulletin. However, debt collectors would be well advised to ensure that they are as protected as possible until that matter is determined.
This means that whether you think the CFPB has the authority to enforce the No Surprises Act against debt collectors or not, you should ensure your organization is ready to deal with it through client engagement, contract updates, collector scripting, dispute management with trend analysis, auditing procedures and more. Further, your agency should be prepared to respond to consumers who state simply, “this bill is a surprise- isn’t that illegal now?” You’ll need to determine when these disputes are valid? How will your team respond to these statements? And how will you gather data to ensure that you can properly escalate broader issues to your clients?
3. The No Surprises Act may only apply to medical debt, but it is yet another clear signal that risk and gap assessments are even more important right now - for medical debt companies and everyone else, too.
On its face, the bulletin indicates, the CFPB expects debt collectors to have policies and procedures in place to ensure they do not seek inaccurate balances from consumers. In other words, debt collectors need to have procedures in place to look at empirical data such as complaint and dispute trends and determine when they need to delve deeper into potential client issues. This may include severing client relationships that do not comply and put your company at risk.
Although there is no substantiation requirement in the FCPA or in Regulation F, it is clear that the CFPB expects debt collectors to have adequate policies and procedures in place to proactively identify and address issues, even where an issue might be with the data provided by a client. All ARM entities should be routinely performing internal risk and gap assessments to ensure they can find these issues.*
*A thorough internal risk and gap assessment has never been more important. Starting next month, insideARM's Research Assistant takes a deep-dive into best practices for internal risk and gap assessments. We'll go through the CFPB's guidance, section-by-section, and deliver the practical insight you need to conduct a stronger, more compliant assessment. Get a masterclass on gap and risk assessments AND the discussion and resources you need to assess new compliance challenges quickly when you join Research Assistant. Don't miss a section.