The plaintiffs challenging medical debt collection guidance from the Consumer Financial Protection Bureau plan to dismiss their suit after hearing that the Bureau has no plans to reissue the guidance.
Driving the news: In a status report filed yesterday, the CFPB said it has no intention of bringing back the controversial medical debt advisory opinion at the heart of lawsuits filed by ACA International, Collection Bureau Services, Inc., and Progressive Management Systems. The Bureau formally withdrew the guidance in May and said it was unlikely to reissue it in any form.
Why it matters: The CFPB’s decision clears the way for the plaintiffs to voluntarily dismiss their lawsuits without prejudice. The advisory opinion, issued in October 2024, had created significant uncertainty for medical debt collectors, leading industry trade groups and agencies to challenge the legality and clarity of the guidance.
What the CFPB said: The Bureau cited several reasons for abandoning the guidance:
- It did not provide complete or exhaustive instructions for complying with the Fair Debt Collection Practices Act.
- It was designated a “major rule” by the Office of Management and Budget, signaling potential high costs and burdens on collectors.
- It lacked a formal notice-and-comment process, which the Bureau now says would have been preferable to ensure clearer direction and consider the impact on small businesses.
Between the lines: The CFPB’s retreat appears to be a strategic move to avoid further legal scrutiny and to reassess how it issues nonbinding guidance. The Bureau noted that its examples may have caused confusion rather than offered meaningful compliance assurances.
What’s next: The plaintiffs have notified the Bureau that they intend to dismiss their claims under Rule 41 of the Federal Rules of Civil Procedure, which allows for voluntary dismissal. Once that occurs, the matter will likely be closed—unless the Bureau revisits the issue in a more formal rulemaking process.
Catch up quick: ACA and other plaintiffs sued the CFPB in late 2024 after the Bureau issued an advisory opinion suggesting certain medical debt collection practices could be deceptive or unfair under the FDCPA. The plaintiffs argued the Bureau lacked authority to issue such sweeping interpretations without proper rulemaking.
