The Consumer Finance Protection Bureau on Sept. 21 outlined proposals aiming to end "coercive debt collection tactics, clean up inaccurate data, and improve credit score predictiveness."
A 2022 report found that roughly 20 percent of Americans have medical debt, but the CFPB said its previous research has shown that medical billing data on a credit report "is less predictive of future repayment than reporting on traditional credit obligations. Mistakes and inaccuracies in medical billing are common and can be compounded by problems such as disputes over insurance payments or complex billing practices."
The CFFB said if finalized, the proposals would:
- Prohibit consumer reporting companies from including medical debts and collection information on consumer reports that creditors use in making underwriting decisions.
- Prohibit creditors from using medical collections information when evaluating borrowers' credit applications.
- Prevent debt collectors from using the credit reporting system as leverage to pressure consumers into paying questionable debts, as unpaid medical bills would no longer appear on consumers’ credit reports used by creditors in making underwriting decisions.
ACA International, the Association of Credit and Collection Professionals criticized the proposal, saying it is unfortunate the CFPB and White House are "not considering the hosts of consequences that will result if medical providers are singled out in their billing compared to other professions or industries."
"As an overarching matter, ACA does not believe the CFPB should take any actions related to limiting options for healthcare providers without robust and data-driven research proving that they will not harm the ability to access medical services or the ability to offer and be compensated for medical care provided," ACA International CEO Scott Purcell said in a Sept. 21 news release. "It is also far from clear that the CFPB has the legal authority to take the actions it proposes in its SBREFA outline discussed today related to credit reporting."
Read the full outline of the proposal and alternatives under consideration here.