Can you use a consumer's available balance as an incentive to pay? Are you getting inundated with 040 dispute codes? Did you miss our article about a new healthcare law in New Mexico? Read on for answers...

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Credit Report Info & Debt Collection

can you use a consumer's available balance as an incentive to pay?

 

A Research Assistant member recently reached out with this question:

I am curious about something. I know we can run a consumer's credit report; but can we tell them we see they have funds available on a specific card? I have looked around but haven't gotten a straight answer on this. I appreciate any help you can provide.

I'll preface my straight(ish) answer with the usual legal disclaimer: This is not legal advice and cannot be used as legal advice. Especially on account of how very not-a-lawyer I am.

Can you? Technically yes (which I cover below). Should you? That's a question of risk appetite. The scripting around this is something you'll want to pay close attention to: it could be easy for a consumer to feel pressured, and turn that into a complaint or, worse, a suit. (This has Potential UDAAP written all over it.)

Some things to consider when assessing your risk appetite:

How certain are you the debt is owed? If a consumer is convinced to pay a debt that isn't hers, and is convinced to do that because a collector says, "I see you have $1500 in available credit on your Visa," that sounds like a nightmare.

The other thing you would want to weigh is the kind of debt you're collecting. Asking a consumer to pay one credit card debt with another isn't a great practice.

How I Got to Yes

Section 604 of the Fair Credit Reporting Act concerns "Permissible Purpose." To pull a credit report on a consumer, you need a permissible purpose.

Collection agencies are covered under the FCRA as being an entity that can pull a consumer's credit report:

a. In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

3. To a person which it has reason to believe

A. intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer

F. otherwise has a legitimate business need for the information

ii. to review an account to determine whether the consumer continues to meet the terms of the account

You can use a credit report to confirm location and other information. You can also see the consumer's activity -- which includes, as you mention, balances and available credit. While our economy is still trying to figure out Covid, and while consumers are still facing uncertain finances, I'd suggest this is a "tread carefully" area.

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Member Question: Dispute Code 040

Are you also getting an unexpected uptick in 040s?

A member asks,

We have seen a huge uptick in the dispute code 040 for e-OSCARs.  The 040 code is “account involved in litigation”.  There is nothing, currently, on our system that confirms the information that the account is related to a suit, meaning we have not been informed by our clients that they are being sued nor are we being sued on the account.   My question to the group is, what would be a “reasonable investigation” into that dispute?

    • December 040 codes:  2 accounts
    • January 040 codes: 3 accounts
    • February 040 codes: 140 accounts
    • March 040 codes: 680 accounts

It appears that someone or something (TikTok) is telling consumer’s to pick this dispute code for some reason that is currently unclear to me.

Click to learn what Research Assistant Members have to say...

 

In Case You Missed It: New Mexico Law Targets Healthcare Collections

Could a New Mexico law be the canary in the coal mine?

 

  • Name: Patients Debt Collection Practices Act
  • Goes into effect 7/1/2021
  • Your healthcare provider partners will have to:
    • offer insurance verification
    • offer options/assistance to uninsured patients
    • include the abovementioned services on every bill to the patient
    • include the abovementioned bill(s) to their debt collection/debt buyer partners
  • You as the collector/debt buyer will have to:
    • apply payments on the date they were received or the next business day (if received after business hours)
    • (that's business hours as in the hours your business is open, not the hours you've set internally for receiving payments)
    • refrain from entering into agreements with patients which have the practical effect of patients waiving their rights to resolve a dispute
  • Both of you in this relationship will have to:
    • Be aware of your patients' financial state: "The Act prohibits health care facilities and other medical creditors from pursuing collection action on indigent patients (defined as those making less than 200% above the poverty limit)."

Read the full story here >>>

 

Interested in Healthcare? What About HIPAA Business Associate Agreement Templates?

Get the freshest compliance tools, answers, and insight at iA's Research Assistant 

Research Assistant members can download templates from the site. Not a Research Assistant member? DO YOU EVEN LIKE COMPLIANCE?? Learn more about why Research Assistant is the easiest decision you'll ever make over here: iA's Research Assistant


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