Rather than just simply file a comment and be one of a small number of individuals and groups to denounce the Consumer Financial Protection Bureau’s proposed medical debt credit reporting rule, Republicans from the House Financial Services Committee instead chose to go right to the source, and sent CFPB Director Rohit Chopra a letter with their concerns. The letter questions the political motives for the CFPB’s proposal and chastises the Bureau for not including more data to support its claim that there are more inaccuracies with respect to the reporting of medical debt than other types of debt.
Consumers will be the ones who ultimately pay the true costs if this rule is implemented, the committee members argue. That payment will come in the form of higher medical costs, more consumers being rejected when applying for credit, and financially vulnerable consumers being required to pay for medical visits and treatments up front, in full.
The Bureau has had the power to make these proposals for more than a decade, since it has the authority to implement the necessary regulations that govern how medical debts are managed on consumers’ credit reports. Why has it decided to act now, after a decade of inactivity, the committee members questioned, saying that the timing raises “questions about the political nature of this rulemaking.”
Citing the Bureau’s 2014 report that concluded consumers with paid medical collections were less likely to be delinquent than other consumers with the same credit score, and the fact that credit reporting agencies currently only include medical collections on consumers’ credit reports if they are more than one year past due or where the balance is in excess of $500, the information appearing on consumers’ credit reports are unpaid medical debts that the CFPB “demonstrated to be associated with higher delinquency rates.”
“The CFPB’s failure to provide any further analysis as to how the recognized predictive value of unpaid medical debt is insufficient to allow for inclusion in consumer reports inserts confusion and increases the likelihood of further inaccuracies in underwriting decisions,” the Republican committee members wrote.
