Service Delayed: Military members and veterans lodge thousands of complaints over credit report mistakes

Inaccuracies not only blur financial futures but could also derail careers
Caresse Jackman - Reporter; Scott Smith - Photojournalist/Editor
Published: Aug. 29, 2022 at 11:47 AM PDT
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InvestigateTV - Tiffany Ellett has lived her adult life dedicated to service. After four years in the Army as an intelligence analyst, with tours in Afghanistan and Iraq, she took a new role with The American Legion, a veteran service organization.

In her position as Deputy Director for Health Policy, Ellett said she’s able to help veterans navigate the same challenges she faced while transitioning back to civilian life after living in a system where many things were handled by the military.

“We’re not trained, when you come out there’s no reverse basic training that helps you with financial literacy or medical literacy,” Ellett said.

Ellett said perhaps the biggest struggle her clients face is understanding their medical bills.

“There’s a number of things that can interfere with veterans and service members receiving their bills, and then once we get it we’re not really sure what to do with it,” she said.

Servicemembers and veterans aren’t just lost trying to learn financial and medical systems; a new Consumer Financial Protection Bureau (CFPB) report reveals thousands of complaints claiming those systems are failing them altogether.

Tiffany Ellett on the day of her 2010 graduation from Army Advanced Individual Training. Ellett...
Tiffany Ellett on the day of her 2010 graduation from Army Advanced Individual Training. Ellett works said many veterans struggle with the transition back to civilian life, particularly when it comes to financial literacy.(Tiffany Ellett)

According to the CFPB’s Office of Veteran Affairs latest report, since 2011, service members, military families and veterans registered over 250,000 consumer complaints. In 2021 alone, 51% of those complaints were for “inaccurate information on their credit reports”.

For example, this complaint out of Florida:

“I went to the XXXX. I had insurance through the military XXXX XXXX The visit was not billed under my insurance it was billed as though I had none. Now its on my credit report. Ive disputed it’ multiple times and they refuse to drop it or try to work it out.” – CFPB Report

Jim Rice, the CFPB’s Assistant Director for the Office of Servicemember Affairs, said those mistakes can lead to significant problems.

“It really can be serious for that service member, [and] can have a negative impact on their credit rating,” Rice said.

One of the major findings of the CFPB report was the major credit bureaus, Equifax, Experian and TransUnion, were failing to respond to military members’ credit complaints.

According to the report, in 2021 there was a 71% increase in the number of complaints military members filed, indicating the credit agency did not reply within 30 days or did not resolve the issue within 30 days.

The report identified complaints from across the United States in 2021. Georgia, Washington D.C. and Nevada came in as the top areas for complaints per capita, and hundreds of complaints were lodged by service members stationed abroad.

Rice said that turnaround time on complaints was not good enough.

“The national credit reporting companies should hold themselves to the standard that they’ve agreed that they should meet,” Rice said “That is to reply within 30 days and fix that credit appropriately for that service member.”

The CFPB supervises TransUnion, Equifax, and Experian for compliance with several federal laws, including the Dodd-Frank Act and the Fair Credit Reporting Act (FCRA).

According to a statement from the bureau, the CFPB also “takes enforcement actions against entities or persons who violate the FCRA. Relevant enforcement actions over the years can be found here.“

“Transunion, Experian and Equifax, we’re going to hold them accountable for accuracy and making sure that they’re not allowing inaccurate information to flow into the system,” said John McNamara, the CFPB’s Principal Assistant Director of Markets.

Communication breakdown

Members of the military, their families, and veterans are covered by an insurance program called TRICARE. The program uses a network of VA facilities and civilian healthcare options.

According to the CFPB report, a “common way that service members accrue medical debt” is during a breakdown in the medical billing process between the private provider and TRICARE.

One complaint referenced in the report detailed a service member’s struggles with the process:

“I asked the company, [NCRC], to investigate thoroughly the [debt collector] account on my credit report because it in inaccurate. It is for a medical debt that I am not responsible for. The hospital that it would have come from had full access to our insurance information and billed by our active-duty military insurance, Tricare. The insurance paid this debt. Now, [debt collector]is trying to get double paid by us as patients as well for the hospital. This is illegal and unethical. I have asked the creditor and [NCRC] several times to remove it and have even provided evidence to w[h]ere other credit bureaus found it to be a fraudulent debt claim and remove it. [NCRC] still refused to remove it.” – CFPB REPORT

Complaints filed by service members came from across the United State and overseas. The most...
Complaints filed by service members came from across the United State and overseas. The most common complaints revolved around credit or consumer reporting and debt collection, which in total accounted for more than 60% of complaints.(Consumer Financial Protection Bureau)

InvestigateTV reached out to the Veterans Administration and the Defense Health Agency (DHA), which operates TRICARE about billing problems affecting servicemembers’ credit.

In a statement, the VA wrote it recently changed its process on how it reports to the credit reporting agencies which yielded a “99% reduction” in unfavorable debt reports.

The DHA replied in an email that its managed care contractors are “required to have a process for documenting all inquiries and referral” to a debt collection assistance officer. The statement went on to say it received a monthly report on debt collection cases and its health care contractors neither send “accounts to debt collection nor tracks or monitors the status of cases transferred to a debt collection agency by a provider.”

The impact of inaccuracies

John McNamara worked in the debt collection industry for more than 20 years. He’s now the CFPB’s Principal Assistant Director of Markets. He said credit inaccuracies can have a significant impact.

“I can’t emphasize enough how important it is for that information to be accurate, because big decisions are based on that information,” McNamara said.

For service members, inaccurate debt information not only hurts their chances of buying a house or a car, but it can also negatively affect their security clearance a certification that allows an individual to “have access to classified information or be assigned to a highly sensitive job.”

Credit report flags became more important in 2017 when the Department of Defense switched from a five- or ten-year check for security clearances to continuous monitoring.

“If there’s a flag on someone’s credit process, they could indicate that they’re a risk and it could influence their security clearance,” said Jim Rice.

McNamara said that can have a devastating effect.

“If it’s not addressed and it’s wrong, it can hang out there for seven years, depriving you of credit, depriving you of the place that you want to live, maybe depriving you of the job of your dreams,” McNamara said.

He said communication was key for debt collectors to reduce the number of possible inaccuracies on military members’ and veterans’ credit reports.

“For one thing, be responsive to the consumers,” McNamara said. “Double check the clients. Make sure that the information they’re getting from the clients is absolutely accurate.”

InvestigateTV reached out to the big three credit companies to ask if they were instituting changes because of the report.

TransUnion, the only company to respond, referred us to the Consumer Data Industry Association (CDIA), a representative for the nationwide credit bureaus.

The CDIA declined our request for an interview but said in a statement “it’s committed to helping military service members and all consumers resolve any potential errors on their credit reports.” The CDIA recommends people file a dispute online if they feel their information is inaccurate or incomplete.

According to a March 2022 press release, Experian, Equifax and TransUnion released a joint statement announcing that “paid medical collection debt will no longer be included on consumer credit reports”. Also, in 2023 the three major credit bureaus will stop reporting medical collection debt below $500.

The CFPB said there are steps service members and veterans can take to protect their credit:

  • Check your bills for accuracy and ask debt collectors to verify the debt by providing you with information about the collector and the bill.
  • Steer clear of people charging an upfront fee. Don’t pay a person or service that promises to keep medical bills off your credit report. Those are likely scams.

The CFPB said debt collectors can contact you while trying to collect a legitimate debt, but they must comply with the laws that apply to debt collection, which include avoiding harassing or abusive calls.

If the calls persist, the CFPB said you should report them.

Jim Rice, a veteran himself, said he hopes the CFPB’s report leads to changes in the way service members and fellow veterans are treated when it comes to fixing and eliminating problems on credit reports.

“I think it’s important that people who are making the commitment that they do, to the country, get at least the things that they are owed,” he said.

Full statements

OFFICE OF VETERANS AFFAIRS A STATEMENT:

“VA recently changed the process in which we report to the Credit Reporting Agencies (CRA) which yielded a 99% reduction. In regards to medical copayment debts, VA has never reported delinquent medical copayments to the CRAs.

The VA now will only report debts that meet the following standards: the debt is classified as currently not collectible, the debt is not owed by an individual who is determined by VA to be catastrophically disabled or has reported to VA a gross household income below the applicable geographically adjusted income limits, and the outstanding debt amount is over $25. This new rule authorizes VA to reduce reporting to roughly 13 accounts per year. The final rule was published in the Federal Register on February 2, 2022 and put into effect March 4, 2022.”

TRICARE STATEMENT

“DHA is responsible for oversight and management of the TRICARE Managed Care Support Contracts. Subject Matter Experts (SMEs) assess contractor performance against all contract requirements, including claims and customer assistance to beneficiaries with claims issues.

DHA’s debt collection support to beneficiaries is multi-pronged and includes government Beneficiary Counselor and Assistance Coordinators (BCACs) and Debt Collection Assistance Officers (DCAOs) located at Military Treatment Facilities and within the TRICARE Health Plan Division. The Managed Care Support Contractors (MCSCs), currently Humana Government Business (HGB) and Health Net Federal Services (HNFS), have internal customer service procedures for handling of debt collection inquiries. Synchronized claims and debt collection inquiry processes between DHA and the MCSCs include submission of inquiries by mail, fax or email; assignment to a DCAO; coordination with the beneficiary on any necessary actions, and, communication of final resolution by phone, mail, or email.

The TRICARE contracts include timeliness and accuracy requirements established by the Code of Federal Regulations (CFR) and TRICARE Operations Manual for claims processing and debt collection assistance for debt collected by the government as well as providers. The MCSCs are required to have a process for documenting all inquiries and referral to a DHA DCAO. The MCSCs report monthly to DHA the number of DCAO cases received and referred. Neither MCSC sends beneficiary accounts to debt collection nor tracks or monitors the status of cases transferred to a debt collection agency by a provider.

A review of the HGB and HNFS reports found the following number of claims referred for debt collection assistance:

1. HNFS (July 2018 - April 2022): 1298 claims

2. HGB (January 2018-June 2022): 15741 claims

Claims for health care services are only reimbursable for covered benefits obtained in accordance with the applicable TRICARE plan. Beneficiaries and providers must comply with TRICARE policies for obtaining and providing care. e.g., if a referral is required to receive services, the claim is not payable if a referral was not obtained. If an Active Duty Service Member sees a private sector provider without an MTF referral (or DHA-approved Supplemental Health Care Program Waiver) and the claim is denied by the regional contractor, it is likely to get sent to collections.

There are many reasons for non-payment of a claim, e.g., lack of referral, wrong billing codes or providers not in the system. When a TRICARE claim fails to pay, MCSCs utilize internal processes (approved by DHA) to identify the problem and notify the beneficiary and/or provider(s) of the issue(s) and assist those parties in correcting or appealing the claim.

DHA and the MCSCs provide continuous beneficiary and provider education and information regarding TRICARE benefits and reimbursement to beneficiaries and providers via DHA and MCSC websites, briefings, mailings and other methods. During the COVID pandemic, the MCSCs even increased the number of virtual “non-contact” events to maintain communication and education for beneficiaries’ ad providers, including Reserve and National Guard units.

Specific to Active Duty Service member (ADSM) and TRICARE claims, DHA continues to work to clarify the rules governing ADSM private sector care and claims payment/denials - to include compliance with referral requirements (and permissible consequences) and whether or not ADSMs may avail themselves of Other Health Insurance (OHI) if such coverage is not excluded by the policy terms based on military duty status).”

CONSUMER DATA INDUSTRY ASSOCIATION STATEMENT:

“Accurate credit reporting is vital to a healthy economy and consumers—especially those serving our country in uniform. We are committed to helping military servicemembers—and all consumers—resolve any potential errors on their credit reports. We are working diligently across the financial ecosystem to make sure consumer credit reports are accurate and comprehensive.

We recommend consumers proactively monitor their credit reports so that they are more aware of what lenders may see. Our industry has taken joint action to extend the pandemic response service offering free weekly credit reports to consumers through the end of 2022. These free weekly credit reports are available from AnnualCreditReport.com, the only official website authorized by federal law for this purpose.

If a consumer reviews their credit report and finds their personal information to be inaccurate or incomplete, they may file a dispute online with Equifax, Experian and TransUnion. The dispute process is an important tool to notify credit bureaus about any data that may have been furnished inaccurately.”