The Consumer Financial Protection Bureau has joined a pair of industry groups in asking a federal court in Texas to vacate a Biden-era rule that banned medical debt from credit reports.
The rule, finalized Jan. 7, prohibits lenders from considering medical information when making lending decisions and bans consumer reporting agencies from including medical debt information on credit reports and scores.
The Cornerstone Credit Union League and Consumer Data Industry Association sued the CFPB, alleging the rule violated the Fair Credit Reporting Act, which “expressly permits consumer reporting agencies to report information about medical debt that has been coded to protect the medical privacy of consumers, and expressly authorizes creditors to consider the coded medical debt information in making credit decisions.”
In an April 30 court filing, the CFPB said it now agrees with the industry group that the rule exceeds the bureau’s authority and is contrary to law.
The rule was set to take effect in March, but a 90-day preliminary injunction bumped the effective date to June 15, according to court records.
In a memo to staff, the CFPB’s chief legal officer said the bureau plans to deprioritize several areas, including medical debt, The Wall Street Journal reported April 17. The memo said the bureau would focus on fraud with “consumer damages as opposed to matters based on the Bureau’s perception that consumers made ‘wrong’ choices,” according to the report.
