Thirteen trade associations requested the Consumer Financial Protection Bureau (CFPB) grant a 30-day extension to the comment period for the bureau’s proposed rule prohibiting medical information from being included in consumer credit reports.
In a letter to CFPB Director Rohit Chopra, trade groups representing consumer reporting agencies (CRAs), debt collection organizations, lenders, and other financial services providers insisted the substantial impact the rule would have on the U.S. economy warrants a longer review period. Additionally, given the “interconnected set of players” involved in credit reporting, in general, and medical debt reporting, the trades insisted the bureau must seek feedback from a wide scope of interested parties.
“The rule seeks to prohibit the reporting and consideration of $49 billion of legitimately owed debt by 15 million consumers,” the trades wrote. “This would substantially impact the American economy and a thorough analysis cannot be adequately reviewed in a 60-day comment period. The bureau needs to hear not just from CRAs and debt collectors but also from lenders, healthcare providers, and medical device manufacturers. The bureau must also seek input from prudential regulators tasked with protecting the safety and soundness of our banking system.”
The trade groups emphasized their belief in the importance of ensuring accuracy in credit information protected by the Fair Credit Reporting Act despite collective concerns about the proposal.
“The safety and soundness of lending and credit-granting practices are on the line when the CFPB seeks to remove debt on the scale proposed,” the trades wrote. “Regardless of whether medical debt is unplanned, debt is still a contractual obligation, and having less information available still presents credit risks to lenders and creditors, threatening to put consumers in untenable situations.”
The letter cites a portion of a comment submitted by the American Hospital Association (AHA), expressing concerns that the proposed rule could “incentivize patients to forego paying bills.”
The AHA asserted the rule “could remove an incentive for individuals to get insurance if they believe they can rely on not paying their bills.” Although hospitals often provide financial assistance, the AHA noted that “such assistance is not a substitute for comprehensive health insurance and, as a result, patients who choose to forego coverage may face a barrier to routine preventative and restorative care.”
The CFPB issued the proposed rule in June, with provisions to remove medical bills from most credit reports, prohibit lenders from factoring medical debt information into credit eligibility decisions, increase data privacy protections, help consumers increase their credit scores and increase their chances of loan approvals. It would also prevent debt collectors from using medical debt information to pressure consumers into paying debts they may not actually owe.