Collector - May 2020 - 25

CREDIT REPORTING:
IS IT SUSTAINABLE UNDER
CURRENT CONDITIONS?

many clients require it). The resources
required to train employees, process and
properly respond to disputes, deal with
litigation-legitimate and frivolous-
and comply with the simultaneously
outdated and evolving requirements of
a 50-year-old law can make any agency
owner wonder: Is it worth it?
Those who say yes point out that credit
reports are an essential link between the
consumer and the debt collection agency.
"I think what gets lost in the
discussion is the evolution of consumer
preference in how they wish to be
contacted. Given the explosion in call
blocking technology and the increase
in mailed collection letters that go
unopened, credit reporting can become
the only way to 'communicate' with
a consumer about a debt that doesn't
involve litigation," Anthony said. "What
many consumer advocates fail to realize
is that if debt collectors can't reach
consumers through traditional lines of
communication, it will increase litigation
against consumers."
Often when consumers see the account
on their credit report, they call or email
the agency to follow up. ARM companies
that discontinue credit reporting may
see a corresponding drop in recoveries
because that connection is severed.
Still, Anthony says he doesn't see a
future when all ARM companies decide
to opt out of credit reporting entirely.
"I will tell you I've seen everything
from the most conservative approach to
credit reporting to the most aggressive,
but at the end of the day if you are going
the most conservative route, you may be
losing market share," he said. "So, what
should do you do? It's a tough question."
The answer may lie, as ACA has
argued to the FTC and CFPB, in FCRA
reform that considers the modern
problems plaguing the credit reporting
process. But how long it will take to get
that clarity is anyone's guess.

There is a tremendous cost involved for
ARM companies that choose to credit
report (if in fact it is their choice-

Anne Rosso May is managing editor of
Collector magazine.

caused a lot of confusion as to what can be
reported and when, particularly when it comes
to medical debt. Often data furnishers are
unsure about the process of reporting medical
debts where insurance is paying part of the bill.
The situation could get even more
complicated. Legislation that passed through
the U.S. House of Representatives, the
Comprehensive CREDIT Act of 2020, could
impact agencies' options to communicate
with consumers about medical bills. As
part of the package, the House also passed
the Restoring Unfairly Impaired Credit
and Protecting Consumers Act, which
would amend the FCRA by delaying credit
reporting on medical debt. The bill passed
the House in January by a 221-to-189
margin, largely split along party lines.
It's possible the bill will stall in the
Republican-controlled Senate, however a
focus on credit reporting in the wake of the
COVID-19 crisis, in conjunction with the
election and potential lame duck Congress,
mean nothing should be ruled out. ACA sent
a letter opposing this legislation and has been
advocating in the Senate for a more tailored
and nuanced approach to credit reporting.
Another bill, the Consumer Protection
for Medical Debt Collections Act, would
prohibit the ARM industry from engaging in
activities to collect or attempting to collect
medical debt for two years. It would also
delay the ability to report medical debt to
credit reporting agencies for one year and
would create a ban on reporting debt arising
out of "medically necessary procedures."
ACA is working to ensure that Congress
understands the problems associated with
this legislation, including the broad impact
this issue could have on the ability to provide
medical care to consumers, the accuracy
of the credit reporting system, and the
economy as a whole, including the ability to
access credit and services.

COLLECTOR 05.20

1

Many furnishers
find it difficult to
evaluate disputes and
communications that do not
specify consumers' concern.

2

Legislation moving
through Congress
would significantly delay
the ability to report medical
debt to CRAs and bans the
reporting of debt arising
out of "medically necessary
procedures."

3

The CFPB says
it will adopt a
"flexible supervisory and
enforcement approach"
on FCRA compliance
during the pandemic.
25



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