Senator Gallego And Colleagues Challenge CFPB’s Reintroduction Of Medical Debt On Credit Reports

Senator Ruben Gallego (D-AZ) and 29 other Senate members have requested an explanation from the Consumer Financial Protection Bureau (CFPB) following its decision to allow medical debt to be reported on consumer credit reports. This move reverses a previous rule implemented earlier this year that removed such debt from reports. The Senators expressed concern about the potential impact on consumers and requested more information about the rationale behind the change.

In April, the Consumer Financial Protection Bureau reversed a previous rule, allowing medical debt to be included once again on consumer credit reports. In response, Senator Ruben Gallego (D-AZ) and 29 Senate colleagues sent a letter to Acting Director of the Office of Management and Budget Russell Vought, requesting the evidence used to support the decision. “We write to request the information you relied on in making that determination, including any communications with collection agencies,” Gallego stated in a press release.

Medical debt, they argue, is notoriously rife with inaccuracies and not indicative of an individual’s broader creditworthiness. Gallego’s press release specifically notes that “almost half of all medical bills contain at least one error, and almost half of nonprofit hospitals have routinely and mistakenly billed patients who were eligible for free or discounted care.” These assertions drive the point home that the decision to vacate could shackle consumers with undeserved financial burdens.

On April 30, the Consumer Financial Protection Bureau (CFPB) filed a joint motion with an industry group seeking to vacate a rule that previously removed medical debt from consumer credit reports. In response, a group of Senators expressed concern that the action could benefit corporations at the expense of consumers. They are requesting the CFPB release all related documentation and communications with the debt collection industry. The Senators argue that the original rule did not significantly affect the accuracy of credit scores and provided relief to many Americans.

According to data cited in Senator Gallego’s press release, approximately 8.2 percent of adults in Arizona reported having medical debt over a two-year period, representing an estimated 460,000 residents. Arizona is among the states where medical debt continues to affect a significant portion of the population.