The CFPB is in the process of completing its final rule intended to ban the inclusion of medical debts in credit reports, bureau Director Rohit Chopra said at a White House session intended to focus on practices in the medical debt collection industry.
“Often, predatory companies threaten to put medical debt on people’s credit reports, where lenders, landlords, and employers presume their accuracy,” Chopra said, in his prepared remarks. “Faced with further harm to their financial security, people may feel pressured to pay off these bills, even if the charges are wrong or fake.”
Chopra said that among those with medical debt, more than 40% say they received an inaccurate bill, while 70% said they were asked to pay a bill that should have been covered by insurance.
The director said that in addition to the upcoming CFPB rule, some states already have banned the use of medical debt in credit reports. Most recently, California enacted such legislation.
Chopra said that the three major nationwide credit reporting agencies have removed medical debts from credit reports, but added that many people still are battling over bills that appeared on those reports in the past.
Chopra said that the CFPB also is specifically concerned about medical debts incurred at nonprofit hospitals. Those hospitals, he said, must offer assistance to patients in need of financial help. However, the CFPB continues to hear complaints that would indicate that those programs are not operating as intended, according to Chopra. In some cases, that is due to eligibility requirements set by the hospital, he said, adding that in other cases, patients are not screened for eligibility or face complicated applications.
Before the event, the CFPB issued an advisory opinion stating that debt collectors are strictly liable under the Fair Debt Collection Practices Act and Regulation F for engaging in such practices as:
- Collecting an amount not owed because it was already paid.
- Collecting amounts not owed due to Federal or State law.
- Collecting amounts above what can be charged under Federal or State law. This includes amounts that exceed limits specified in the No Surprises Act.
- Collecting amounts for services not received.
- Misrepresenting the nature of legal obligations.
- Collecting unsubstantiated medical bills, as debt collectors are required to have a “reasonable basis” for asserting that the debts they are trying to collect on are valid.
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