U.S. Chamber of Commerce Comments on CFPB Proposed Rule to Eliminate Medical Debt from Credit Reports

To Whom It May Concern:

The U.S. Chamber of Commerce Center for Capital Markets Competitiveness (“Chamber”) appreciates the opportunity to comment on the Consumer Financial Protection Bureau (“CFPB”) Proposed Rule on Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V) (the “Proposed Rule”).[1] The Chamber believes the CFPB lacks the authority to finalize the proposal, seeks to override direct statutory language enacted by Congress, and, if finalized, the proposal would harm consumers and endanger the safety and soundness of the financial sector. Accordingly, we believe the Proposed Rule should be withdrawn.

We are concerned by the CFPB’s proposal to substantially restrict creditors’ ability to obtain and use financial information related to medical debts for credit eligibility determinations. The Chamber is also concerned by the Proposed Rule’s limitations on the circumstances under which consumer reporting agencies (“CRAs”) are permitted to report medical debt information to creditors in connection with credit eligibility determinations. The CFPB believes that these changes would “help ensure that medical information does not unjustly damage credit scores” and “help keep debt collectors from coercing payments for inaccurate or false medical bills.”[2] But the CFPB fails to consider the significant negative consequences that the Proposed Rule would cause, including higher borrowing costs and reduced access to credit for consumers, and a higher likelihood of default given lenders would be prohibited from considering information about medical debt.

The CFPB’s Proposed Rule has failed to acknowledge the benefits of extending credit based on risk and a consumer’s ability to repay. The Chamber released a report in 2021 finding that recent calls for removing risk-based pricing in favor of a uniform pricing system will hurt, not help, underserved communities, the credit invisible, and consumers with subprime credit.^[3] Risk-based pricing expands access to credit. It also protects consumers by helping ensure borrowers are not offered loans they will be unable to repay. Further, risk-based pricing promotes safety and soundness by limiting the default rate in a financial institution’s loan portfolio. Failing to account for all relevant aspects of a consumer’s debt profile, including medical debts, would undermine the risk-based pricing system by eliminating a key factor that enables creditors to overcome the adverse information problem when underwriting loans for consumers. The Proposed Rule would lead to more consumers being approved for loans at terms they will not be able to afford to repay, harming consumers who are already struggling with debt.

The Chamber stands ready to work with the Biden Administration and Congress on these important questions related to the cost of medical care, medical billing, and outstanding medical debt. In developing policy proposals in the complex and consequential field of medical care and medical insurance, it will be critical that relevant agencies choose the right tools for the task at hand. To the extent that policymakers believe there are issues about the amount or fairness of medical debt, or how billing is undertaken, those issues should be addressed within the medical care system by the appropriate authorities—these issues are not the purview of the CFPB.

The CFPB should not use the Fair Credit Reporting Act (“FCRA”), or any other consumer financial services regulation, to indirectly address downstream concerns with medical billing that are outside of its jurisdiction. The CFPB cannot—and this proposal would not—make medical care more affordable by removing information from the credit reporting system. In particular, the FCRA is intended to protect consumers from decisions based on inaccurate credit information. It is not a medical billing statute and cannot be used to try to address concerns about the downstream effects of medical costs. Doing so will not help consumers, but instead will do more harm than good within the consumer financial services market.

The CFPB likewise should not—as it proposes here—claim authority not provided by Congress to determine what information should be included on a consumer report based on its “predictive” value. The CFPB compounds this lack of legal authority by building its views on a flawed factual foundation. The CFPB has sought to create a false narrative about medical debt, stating that medical bills “have little to no predictive value when it comes to repaying other loans,”[4] while elsewhere acknowledging that “consumers with medical collections are more likely to become seriously delinquent than consumers without medical collections.”[5] Furthermore, the data set the CFPB relies on to assert that medical debts are less predictive of serious delinquency than other types of debts is outdated and its study utilizes a flawed methodology.

Nor may the CFPB subvert clear statutory language passed by Congress and reinvent the role of state law under the FCRA. In the Proposed Rule, the CFPB misdescribes the relationship between the FCRA and state law. The CFPB incorrectly asserts that state laws regarding the types of information that can be conveyed on a consumer report are not preempted under the FCRA. But the FCRA expressly preempts state laws that seek to regulate information included in consumer reports.[6] Further, the Proposed Rule could be interpreted as the CFPB asserting a violation of state law is a violation of the FCRA. The CFPB does not have this authority with regard to state law.
Read the full letter here.

[1]See CFPB, Proposed Rule; Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V), 89 Fed. Reg. 51,682 (June 18, 2024), https://www.govinfo.gov/content/pkg/FR-2024-06-18/pdf/2024-13208.pdf (hereinafter “Proposed Rule”).

[2]See CFPB, CFPB Proposes to Ban Medical Bills from Credit Reports (June 11, 2024), https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-to-ban-medical-bills-from-credit-reports/#:~:text=Then%20in%20March%202022%2C%20the,data%20on%20unpaid%20medical%20bills

[3] N. D. Pham & M. Donovan, The Economics of Risk-Based Pricing for Historically Underserved Consumers in the United States (Spring 2021), https://www.centerforcapitalmarkets.com/wp-content/uploads/2021/04/CCMC_RBP_v11-2.pdf.

[4]See CFPB, CFPB Proposes to Ban Medical Bills from Credit Reports (June 11, 2024), https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-to-ban-medical-bills-from-credit-reports/#:~:text=Then%20in%20March%202022%2C%20the,data%20on%20unpaid%20medical%20bills.

[5]Proposed Rule at 51,706.

[6] 15 U.S.C. § 1681t(b)(1)(E).