Medical debt collector Syndicated Office Systems will pay about $5.1 milion in relief to consumers after being fined by the Consumer Financial Protection Bureau for allegedly mishandling credit-reporting disputes.

The company does business as Central Financial Control, an ACA International member company. It's an indirect subsidiary of Conifer Health Solutions, which is owned by Tenet Healthcare. The CFPB said Syndicated Office Systems prevented customers from knowing their full rights in medical debt collections. Specifically, the bureau claims the company violated the Fair Credit Reporting Act by neglecting to respond to 13,000 consumer credit report disputes and by not having a system in place to handle credit disputes.  The CFPB also stated that the company violated the Fair Debt Collection Practices Act by failing to provide consumers with statutory-required validation notices within five days of the initial communication with them in connection with the collection of their debt.“These violations are particularly egregious given the challenges many consumers already face who are attempting to navigate the medical debt maze,” CFPB director Richard Cordray said in a news release.A Central Financial Control spokeswoman said the company will pay about $5.1 million in restitution to consumers, forgive about $320,000 in debt and pay a $500,000 civil penalty.  Central Financial Control requested that credit-reporting agencies remove certain information about consumers that the company had furnished, and said that it had updated its own systems before the CFPB issued its enforcement action.

Central Financial Control said in a statement that it was "forthcoming and responsive to all CFPB requests" during the investigation, and it also noted that the CFPB found no evidence that the company engaged in unfair, deceptive or abusive practices.The CFPB has supervisory authority over "larger participants" in the area of consumer financial products and services. As outlined by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB thus can take enforcement action against larger participants and also conduct regular examinations to inspect their policies, procedures and records. 

In the collection industry, the CFPB defines "larger participants" as any collector with receipts at more than $10 million but that rule excludes medical debt from the $10 million threshold. But clearly the CFPB can punish medical collectors as well.

The CFPB previously outlined that it has the authority to examine a company's collection of medical debt and other activities subject to the FDCPA and other federal consumer financial laws.

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