CFPB Report Highlights Experiences of Military Families with Medical Billing, Credit Reporting, and Debt Collection

Washington, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) released its annual report on the top financial concerns facing servicemembers, veterans, and military families, based on the complaints they submitted to the CFPB. Servicemembers told the CFPB about billing inaccuracies and that debt collectors used aggressive tactics to recover allegedly unpaid medical bills. Servicemembers also reported failures by credit reporting companies in helping to resolve inaccuracies and other credit reporting issues.

“Errors on credit reports can jeopardize servicemembers’ financial readiness, and ultimately, their ability to protect our nation,” said CFPB Director Rohit Chopra. “No servicemember, veteran, or military family should be subject to credit reporting rumors and innuendo, nor should they feel coerced to pay a bill they do not owe.”

Servicemembers, veterans, and military families have now submitted more than 250,000 consumer complaints since the CFPB began collecting complaints in 2011. In 2021, they submitted more than 42,000 complaints to the CFPB. The most common types of complaints – more than 60% – were about credit reporting and debt collection.

As described in today’s report, servicemembers may be at particular risk from harm caused by coercive credit reporting tactics, given that negative items on a credit report can jeopardize a military career. As described in the report:

• Servicemembers have concerns about faulty credit reporting: In 2021, servicemembers submitted more than 17,000 credit or consumer reporting complaints, making it the top topic for complaints. When issues with credit reporting, debt collection, or medical billing are not appropriately resolved, the consequences for servicemembers and military families can include loss of housing, separation from service, denial of security clearances, or loss of access to affordable healthcare.
• Nationwide credit reporting companies fail to appropriately respond to servicemembers: Credit reporting companies were not responsive to servicemembers’ requests for investigations. Complaints indicated that investigations took too long and failed to correct errors on their credit reports. Servicemembers reported that they feared that inaccurate medical billing information on their credit reports could cause irreparable harm to their careers.
• Medical billing errors and inaccuracies are a driver of complaints about credit reporting and debt collection: Despite the widespread expectation that a core benefit of military service will be full coverage of medical expenses, servicemembers experienced a range of debt collection and credit reporting activity related to allegedly unpaid medical bills. In 2021 alone, more than half of medical debt collection complaints from servicemembers were about debts the individuals reported they did not owe. Many of these complaints stemmed from breakdowns in communication between private health care providers and TRICARE, the health insurance program for active-duty military.

Collecting debts that are not actually owed can violate the Fair Debt Collection Practices Act, and furnishing information about debts that are not owed can violate the Fair Credit Reporting Act. Additionally, federal law requires the nationwide credit reporting companies to conduct a review of certain complaints sent to them by the CFPB and to report their determinations and actions to the CFPB. The nationwide credit reporting companies’ failure to timely and accurately respond to complaints takes a particular toll on servicemembers, veterans, and military families. The CFPB will use its authorities—including supervision and enforcement—to meet its statutory objectives and ensure that military members and their families receive quality responses to their complaints and do not suffer from unfair debt collection or credit reporting practices.

To address the unique concerns of servicemembers and the military community, the CFPB recommends:

• Medical providers and third-party billing companies should have adequate systems in place to serve servicemembers, veterans, and military families enrolled in TRICARE and the Veterans Choice Program: Complaints suggest that billing issues often occur when providers or third-party billing companies fail to work with TRICARE or the Veterans Choice Program to get paid for servicemembers’ care.
• Medical providers, as well as nationwide credit reporting companies, should consider emulating recent changes by the Department of Veterans Affairs: Veterans Affairs recently implemented a new rule that includes requirements to exhaust all other collection efforts and review patients’ ability to repay before reporting a medical debt as unpaid. Delayed reporting of servicemembers’ allegedly unpaid medical bills to credit reporting companies for a period of time can afford servicemembers an opportunity to address inaccurate or not owed bills.

Read today’s report, Office of Servicemember Affairs Annual Report, January – December 2021.

Consumers can submit debt collection or credit reporting complaints, or complaints about other financial products or services, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).