01/15/2025
𝙏𝙝𝙚 𝙧𝙪𝙡𝙚 𝙬𝙞𝙡𝙡 𝙗𝙚 𝙚𝙛𝙛𝙚𝙘𝙩𝙞𝙫𝙚 60 𝙙𝙖𝙮𝙨 𝙖𝙛𝙩𝙚𝙧 𝙥𝙪𝙗𝙡𝙞𝙘𝙖𝙩𝙞𝙤𝙣 𝙞𝙣 𝙩𝙝𝙚 𝙁𝙚𝙙𝙚𝙧𝙖𝙡 𝙍𝙚𝙜𝙞𝙨𝙩𝙚𝙧.
‼️The CFPB’s final rule brings regulations in line with Congress’s decision to safeguard consumers’ privacy by restricting lenders from obtaining or using medical information, including information about medical debts. Federal financial regulators later created an exception to this restriction, allowing creditors to consider medical debts. This carveout has enabled debt collectors to use the credit reporting system to coerce payments from patients for inaccurate or false medical bills.
The CFPB’s new rule amends Regulation V, which implements the Fair Credit Reporting Act (FCRA), to end this exception and establish guardrails for credit reporting companies, prohibiting them from including medical bills on credit reports sent to lenders, who are banned from considering them. The final rule:
Prohibits lenders from considering medical information: The rule ends the special regulatory carveout that previously allowed creditors to use certain medical information in making lending decisions. This means lenders will also be barred from using information about medical devices, such as prosthetic limbs, that could be used to require that the devices serve as collateral for a loan for the purposes of repossession.
Bans medical bills on credit reports: The rule bans consumer reporting agencies from including medical debt information on credit reports and credit scores sent to lenders. This will help end the practice of using the credit reporting system to coerce payment of bills regardless of their accuracy. Lenders will continue to be able to consider medical information to verify medical-based forbearances, verify medical expenses that a consumer needs a loan to pay, consider certain benefits as income when underwriting, and other legitimate uses.
Today’s rule advances the CFPB’s work to protect consumers from harms from medical debt and coercive debt collection practices. In October, the CFPB issued guidance clarifying that debt collectors violate federal law when they collect on inaccurate or legally invalid medical debts. Previously, the CFPB published in 2022 a report describing the extensive and debilitating effects of medical debt along with a bulletin on the No Surprises Act to remind credit reporting companies and debt collectors of their legal responsibilities under that legislation.
