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16 ACCOUNTS IN COLLECTIONS DROP BY 86M OVER FOUR YEARS e Consumer Financial Protection Bureau (CFPB) has released a new report examining trends in credit reporting of debt in collections between 2018-2022 finding that the total number of accounts that were in collections dropped 33% during that period, going from 261 million tradelines to 175 million tradelines. Over the same period, the share of consumers with a collection tradeline on their credit report decreased by 20%. e CPFB also released additional infor- mation which examines the factors that increase the likelihood of inaccurate medical collections reporting and may contribute to the decline in medical collections accounts. "Our analysis of credit reports provides yet another indicator that, due to a strong labor market and emergency programs during the pan- demic, household financial distress reduced over the last two years," CFPB Director Rohit Chopra said. "However, false and inaccurate medical debt on credit reports continues to be a drag on household financial health." Collections tradelines are furnished to credit reporting companies by third-party debt collec- tors. Commonly reported collection items include medical, rental and leasing, credit card, and utility accounts. Some third-party collectors work on behalf of original creditors for a fee (contingen- cy-fee-based debt collectors) and others purchase accounts outright from creditors (debt buyers). is research was conducted by the CFPB by using their Consumer Credit Panel of five million anonymized credit records selected to be representative of the population. is is an update of a previous study completed in 2019. Key findings of this report, as highlighted by the CFPB, include: • e decline in collections tradelines was driv- en by fewer reports by contingency-fee-based debt collectors, who primarily collect on medical bills. Contingency-fee-based debt collectors reported 38% fewer collections tradelines from Q1 2018 to Q1 2022, while the number of collections reported by the subset of debt buyers increased by 9% over the same period. e number of unique contingency-fee-based debt collectors also declined by 18% (from 815 to 672). Med- ical bills account for 68.9% of furnished collections by contingency-fee-based debt collectors. • Concerns about data integrity and the associated costs that would come with fur- nishing disputed information may explain some of the decrease in collections tradelines on credit reports. CFPB market monitoring indicates that contingency-fee-based debt collectors are moving away from furnishing collections information to credit reporting companies in part due to their concerns about data integrity and their ability to comply with the Fair Credit Reporting Act, including dispute processing. CFPB's anal- ysis on medical debt reporting describes the difficulty of assuring the accuracy of medical bills, including the lack of timely access to healthcare providers' billing and payment information. • Medical collections tradelines still constitute a majority of all collections on consumer credit reports. Despite the decline in collections reporting, medical collections tradelines still represent 57% of all collections items on credit reports. Upcoming changes to medical collections reporting, as previously announced by the nationwide consumer reporting companies, will remove small-dollar (less than $500) and paid medical collection tradelines from consumer credit reports. While this will reduce the total number of medical col- lections tradelines, an estimated half of all consumers with medical collections trade- lines will still have them on their credit reports, with the larger collection amounts (representing a majority of the outstand- ing dollar amount of medical collections) remaining on credit reports. Journal

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