CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1006

Debt Collection Practices (Regulation F); Deceptive and Unfair Collection of Medical Debt

ADVISORY BOARD OPINION OVERVIEW |

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Strict Liability Applies: Intent Is Irrelevant

Debt collectors are now reminded that under sections 807 and 808 of the FDCPA, certain violations incur strict liability—meaning the collector’s intent doesn’t matter. If a collector misrepresents the amount or legal status of a debt, they can be held liable even if it was due to incorrect data from the creditor.

What’s Now Explicitly Prohibited in Medical Debt Collection?

Collecting Amounts Not Owed

You cannot collect debts that:

• Have been fully or partially paid by insurance or other third parties.
• Are not legally enforceable due to Federal or State protections, such as the Nursing Home Reform Act or state workers’ comp laws.
• Exceed caps under the No Surprises Act or state price-limit statutes.
• Are the result of “upcoding”, i.e., charges for more expensive services than were actually rendered.

Debt collectors must verify all amounts before attempting collection—even if the debt appears to be valid on the surface.

Unsubstantiated Debt is a Violation

Debt collectors must possess a reasonable basis for asserting that:

• The consumer owes the debt
• The amount is accurate
• The debt is legally collectible

This includes verifying payment history (including third-party payments), financial assistance policy compliance, and whether a “reasonable” amount is being charged in states that use common law to limit medical pricing.

Failure to substantiate a debt prior to initiating collection is considered a false representation, even if the collector later discovers the error.

Misrepresentation of Legal Status

Collectors cannot present a bill as fully owed when:

• There is ambiguity in contract terms
• The obligation is uncertain or disputed under state law.
• The bill was generated without a clear express agreement with the consumer.

Know the Law That Governs Debt Validity—Watch for State and Federal Caps

• No Surprises Act caps out-of-network charges for emergency care.
• Many state laws also restrict billing for non-emergency services or require that amounts be “reasonable.”

Collecting any amount that exceeds these caps could violate both section 807 (misrepresentation) and 808 (unfair collection practices)​.

Third-Party Collection Still Requires Verification

If a hospital or provider offloads medical debt to a third-party or debt buyer:

• The original pricing must still conform to applicable law.
• The collector is still liable if the bill exceeds lawful limits, regardless of what the provider tells them.

Contact centers and collectors must not assume that bills received from clients are legally sound. Due diligence is mandatory.

Determining “Default” Matters

This is crucial under FDCPA rules that only apply to debts in default. For medical bills:

• •A default occurs according to the patient-provider agreement, or in its absence, applicable state law.
• The date of default is not when the collector treats the debt as defaulted, but when the contractual obligation was missed.

This means many accounts may qualify as “in default” earlier than collectors realize—bringing them under FDCPA scope much sooner.