Phoenix Financial Consumer Financial Protection Bureau Investigation

CFPB Takes Action Against Phoenix Financial Services for Illegal Medical Debt Collection and Credit Reporting Practices

Debt collector attempted to collect on disputed debts using unlawful collection letters and misrepresentations

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) took action against medical debt collector Phoenix Financial Services (Phoenix) for numerous debt collection and credit reporting violations. In at least thousands of cases, Phoenix continued to attempt to collect on a debt that was not substantiated after a consumer disputed the validity of the debt. Today’s order requires Phoenix to pay redress to affected consumers, and pay a $1.675 million penalty to the CFPB’s victims relief fund.

“With medical debt looming over so many American families, we are taking action against companies seeking to illegally profit off patients,” said CFPB Director Rohit Chopra. “Given widespread inaccuracies in medical billing and credit reporting, the CFPB will be working to ensure that patients are not coerced into paying debts that they do not owe.”

Phoenix is a third-party debt collector with its principal place of business in Indianapolis, Indiana. Phoenix collects primarily past-due medical debts, and furnishes information about consumers to consumer reporting companies. Between January 2017 and December 2020, Phoenix received approximately 54.4 million accounts with allegedly outstanding and owed debts from its clients for collection.

In a report published last year, the CFPB found that 43 million consumers had medical bills on their credit reports and that, all together, American families owed around $88 billion in medical bills. Medical debt affects people’s ability to access affordable credit, find quality housing, or even obtain a job. One of the findings from the CFPB’s research is that many consumers report that the medical tradelines on their credit reports are not accurate. When inaccurate or false information is furnished to consumer reporting companies, it can be a form of coercing patients and their families into paying medical bills and debts they do not owe.

The CFPB’s investigation found that Phoenix sent collection letters to consumers who had disputed the validity or accuracy of their purported debts, even though Phoenix had not obtained substantiation for the debts. Debt collectors are required to have a reasonable basis for asserting that a consumer owes a purported debt if a dispute is submitted.

Phoenix’s sending of unlawful debt collection letters risked harming consumers by pressuring or inducing them to pay debts they did not owe. In addition to sending the debt collection letters, Phoenix also furnished debt information to consumer reporting companies. Phoenix’s failure to conduct reasonable investigations of disputes likely resulted in many inaccuracies remaining on consumers’ credit reports, and harmed consumers in a number of ways, such as making credit more expensive or inaccessible.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating federal consumer financial protection laws, including the Fair Credit Reporting Act and Fair Debt Collection Practices Act. The CFPB found Phoenix violated the Fair Credit Reporting Act and its implementing Regulation V by not conducting reasonable investigations of consumer disputes or having reasonable written policies and procedures regarding the accuracy and integrity of the information it furnished to consumer reporting companies. Phoenix also violated the Fair Debt Collection Practices Act by using false and deceptive means to collect debts, and by not ceasing collection of a debt upon notification by the consumer of a disputed debt collection claim.

One Main Financial Claims and Defenses

CFPB Orders Installment Lender OneMain to Pay $20 Million for Deceptive Sales Practices Lender pushed employees to hit sales targets and illegally withheld refunds

MAY 31, 2023
WASHINGTON, D.C. – “The Consumer Financial Protection Bureau (CFPB) has ordered installment lender OneMain Financial to pay $20 million in redress and penalties for failing to refund interest charged to 25,000 customers who cancelled purchases within a purported “full refund period,” and for deceiving borrowers about needing to purchase add-on products to receive a loan. OneMain will pay $10 million in refunds to consumers it harmed, and an additional $10 million penalty to the CFPB’s victims relief fund.

“OneMain pressured its employees to load up its loans with extra charges through false promises of easy cancellation with full refunds,” said CFPB Director Rohit Chopra. “We are ordering OneMain to refund borrowers it cheated and to clean up its business practices.”

Assessing your debt consolidation compamy

How do you access a debt consolidation company

1. Check reviews

First you want a company in business long enough to generate reviews.  Then you want mostly good reviews.

2. Interim Check 

If you retained a company, check to see if progress has been made in 3 or 6 months.  By then creditors should have been contacted and some arrangements made for resolution.  Otherwise, you could find after say 2 years that little progress has been made.

3. Clarify Long-Term Contracts

One worries that you could enter into a long-term agreement and find that little has been done during that period and the consumer is without recourse.


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Debt Consolidation Problems

Some consumers may hire debt consolidation companies.  However, there is a high rate of dissatisfaction.   Here are some common problems.

 1. Does the contract square with the promises.

A company may suggest that your debts will be paid but the contract does not obligate them to do that.  Broad promises of credit repair may be difficult to confirm.

 2. What happens with your monthly payments 

Are the payments going directly towards the debt, how would you know or confirm that.

3. Debt validation or consolidation

The Fair Debt Collection Practices Act has a provision for debt validation.  Years or decades ago, perhaps some companies would relinquish claims without documentation.  Now many companies will be able to verify claims, continue without believing the legal liability will be minimal, or sell questionable claims to third parties.

We can provide you with a free consolidation to review your debt consolidation program.