CFPB Issues Bulletin to Prevent Unlawful Medical Debt Collection and Credit Reporting

Consumer Financial Protection Bureau Requests Information on the Impact of the CARD Act Regulations on Small Entities and the Consumer Credit Card Market

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) released a bulletin reminding debt collectors and credit bureaus of their legal obligations in light of the No Surprises Act, which protects consumers from certain unexpected medical bills.

Companies that try to collect on medical bills that are prohibited by the No Surprises Act, or who furnish information to credit bureaus about such invalid debts, may face significant legal liability under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). The bulletin advises credit bureaus that the accuracy and dispute obligations imposed by the FCRA apply with respect to debts stemming from charges that exceed the amount permitted by the No Surprises Act.

The CFPB will investigate claims and take action against companies that attempt to collect or report or furnish consumer information about debts stemming from charges that exceed the amounts permitted under the No Surprises Act.

“Too many Americans have been shocked by surprise medical bills and forced to pay up through credit report coercion,” said CFPB Director Rohit Chopra. “Our action… should serve as a reminder not to collect on or furnish credit reporting information about invalid medical debt.”

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“The No Surprises Act is the most critical consumer protection law since the Affordable Care Act,” said Health and Human Services (HHS) Secretary Xavier Becerra. “After years of bipartisan effort, we are finally providing hardworking Americans with the federal guardrails needed to shield them from surprise medical bills. We are taking patients out of the middle of the food fight between insurers and providers and ensuring they aren’t met with eye-popping, bankruptcy-inducing medical bills. This is the right thing to do, and it supports President Biden’s vision of creating a more transparent, competitive and fair health care system.”

Concerns over unexpected medical expenses and medical debt have been magnified by the global COVID-19 pandemic. Last year, the Federal Reserve Board reported that 17% of adults had major, unexpected medical expenses in the prior 12 months with the median amount between $1,000 and $1,999, and 23 percent of adults went without medical care due to an inability to pay. In 2014, the CFPB published a report showing that 43 million Americans had overdue medical debt on their credit reports, and more than half of all overdue debt on credit reports is from medical debt.

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The bulletin released by the CFPB includes the following reminders to debt collectors, information furnishers, and credit bureaus:

  • Consumer financial protection law prohibits debt collectors from misrepresenting the character, amount, or legal status of any debt. This prohibition includes misrepresenting that a consumer must pay a debt stemming from a charge that exceeds the amount permitted by the No Surprises Act. In addition, debt collectors are also prohibited from using unfair or unconscionable means to collect or attempt to collect any debt, including the collection of any amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law. Courts have emphasized that collecting an amount that exceeds what is owed would violate the prohibition on unfair or unconscionable debt collection practices.
  • Many debt collectors furnish information about unpaid medical debts to credit bureaus. Furnishers must have reasonable written policies and procedures regarding the accuracy and integrity of consumer information provided to credit bureaus. Credit bureaus preparing a consumer report must follow reasonable procedures to assure the maximum possible accuracy of information contained in the consumer report. Both credit bureaus and furnishers must conduct reasonable and timely investigations of consumer disputes to verify the accuracy of consumer information.
  • For furnishers and credit bureaus, the accuracy and dispute obligations imposed by federal consumer financial protection law apply with respect to debts stemming from charges that exceed the amount permitted by the No Surprises Act.
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The CFPB will continue to work with the U.S. Department of Health and Human Services and other partners to address medical debt abuses.

Read the bulletin, Medical Debt Collection and Consumer Reporting Requirements in Connection with the No Surprises Act .

Visit the Centers for Medicare & Medicaid Services (CMS) No Surprises Act website. 

Read more about debt collection and the Debt Collection Rule.

Read more about credit reporting requirements.

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