Debt collectors cash in on pandemic relief

A Texas firm that describes itself as one of the nation’s largest medical bill collectors was racking up consumer complaints last year.

“For months this company has been reporting inaccurate, unverifiable, erroneous things on my credit report and I am sick of it!!!” states one consumer’s report to the Consumer Financial Protection Bureau in January 2020.

“I get calls almost every other day,” according to another in April. “I consider this harassment.”

“I am reporting a potentially fraudulent credit collection and reporting issue,” said a third.

The firm, Capio Asset Servicing, came under investigation last year as part of Operation Corrupt Collector, an enforcement sweep of the debt-collection industry by federal and state officials. In a September lawsuit, New Mexico Attorney General Hector Balderas alleged the company was seeking to collect debts that were not owed and “causing emotional and physical stress when they threaten and intimidate consumers.”

Yet the federal government’s Paycheck Protection Program last year also gave the company a helping hand: It provided $2.4 million in forgivable loans to Capio and an affiliated firm, the Law Office of Mitchell D. Bluhm and Associates, which works with Capio, investigators said.

Those were just two of more than 1,800 loans that went to debt collectors and high-interest lenders through the Paycheck Protection Program, according to an analysis by the Washington Post. In all, the aid to these firms amounted to more than $580 million.

More than 170 of those recipients have been the subject of a multitude of complaints — each racking up at least 100 with the Consumer Financial Protection Bureau, according to the Post analysis. Twenty-five have been subject to legal enforcement or consumer alerts, many by the CFPB and the Federal Trade Commission.

“Giving these companies government money was a terrible idea,” said Don Yarbrough, a lawyer in Fort Lauderdale, Fla., who represents debtors in collection cases. The government loans to debt collectors essentially finance “debt collection against people who already are dealing with a global pandemic.”