ACA International, alongside Specialized Collection Systems, yesterday filed a lawsuit against the Consumer Financial Protection Bureau in the District Court for the Southern District of Texas. The legal action challenges the CFPB’s recently issued final rule under the Fair Credit Reporting Act regarding medical debt reporting and is the second suit filed against the CFPB in two days seeking to block the rule’s implementation.
Why it matters: While the CFPB claims this will increase credit scores and expand access to low-cost mortgages, the plaintiffs in both lawsuits argue the rule oversteps legal boundaries and creates significant disruptions for lenders, credit unions, and healthcare providers.
- “…a federal agency with no healthcare experience is exploiting this frustration by making a politically- motivated regulation that prevents credit reporting agencies from showing accurate medical debts on credit reports,” the plaintiffs write in their lawsuit. “No agency has the power to do that.”
Core Arguments:
- ACA’s complaint also focuses on the rule’s First Amendment implications, asserting it prevents the communication of accurate information and unlawfully limits speech.
- “ACA creditor members will lose their First Amendment right to receive medical debt information from CRAs. And furnishers lose their right to convey information about medical debt to other creditors and consumers via the CRA channel,” according to the complaint.
What they’re saying:
- Scott Purcell, ACA International’s CEO: “This power grab will harm ACA members, lenders, and small businesses, and put many critical care facilities on life support.”
What’s next: Both lawsuits seek to prevent the rule from taking effect. With overlapping arguments and distinct legal angles, the cases highlight mounting resistance to the CFPB’s actions from industry stakeholders. This legal battle could set a precedent for the limits of agency authority in regulating credit reporting practices.
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