The Consumer Financial Protection Bureau yesterday announced in a court filing that it has agreed to postpone the effective date of its controversial medical debt collection guidance from December 3, 2024, to January 2, 2025. This delay comes in response to a legal challenge from ACA International and other plaintiffs, who filed for a temporary restraining order and preliminary injunction against the CFPB’s advisory opinion.
The big picture: The CFPB’s guidance, issued on October 1, 2024, introduced new requirements for medical debt collection practices, which the industry argues are burdensome and exceed the Bureau’s authority.
Key details:
- The CFPB will revise the applicable date of the challenged Advisory Opinion to January 2, 2025, extending it by 30 days.
- The Bureau maintains that the Advisory Opinion doesn’t create new binding legal obligations.
- Plaintiffs argue the guidance imposes undue burdens on debt collectors, requiring extensive validations and audits of medical debts.
Between the lines: The delay allows more time for the court to consider the pending motions and for both parties to present their arguments.
What’s next:
- The CFPB will file a combined opposition by November 26.
- Plaintiffs will file their replies by December 2.
- A potential hearing may be held on December 6 or 9, 2024, if desired by the court.
Why it matters: The CFPB’s Advisory Opinion stirred considerable debate within the industry, with critics claiming it fundamentally alters how medical debt will be collected. Debt collectors are being asked to take on tasks such as validating medical procedures and evaluating the reasonableness of charges — roles typically handled by healthcare providers. ACA International argues that these changes represent an overreach of CFPB’s authority and impose significant operational burdens.
The big picture: ACA International claims the timing of the CFPB’s Advisory Opinion is politically motivated. The plaintiffs say the CFPB announced these requirements without the usual notice-and-comment period, bypassing established administrative processes. The estimated annual compliance cost for debt collectors could be as much as $400,000, a burden ACA contends will ultimately harm both collectors and consumers.
