CFPB Backs Connecticut and California Bills to Prohibit Medical Debt Reporting

Recently, the Consumer Financial Protection Bureau (CFPB or Bureau) submitted letters to senators in Connecticut and California supporting their proposals to prohibit medical debt reporting.

In Connecticut, Senate Bill 395 aims to prohibit state health care providers from reporting medical debt to consumer reporting agencies (CRAs) for use in a consumer report.

In its letter of support to Connecticut Senator Matt Lesser, the CFPB commends Connecticut’s proactive approach to protect consumers from the harms of medical debt reporting. The CFPB also refers to its 2022 interpretive rule, which explains that states are generally permitted to enact laws that provide consumer protections involving consumer reporting, including the content of information contained in consumer reports or furnished to CRAs.

The Bureau also mentions its rulemaking process announced in September 2023 to prohibit creditors from using or obtaining medical bills and collection information for underwriting decisions. It also aims to prohibit CRAs from providing such information to creditors for use in underwriting.

The CFPB argues that medical debt is less predictive of future consumer credit performance than other tradelines typically found on consumer reports and that unpaid medical bills are often rife with unreliable information. The CFPB also again expressed its position that consumer reporting should not be used as a tool to support collection activity.

In a similar vein, on March 25, 2024 the CFPB submitted a letter of support to California Senator Monique Limón for Senate Bill 1061, which also aims to prohibit the inclusion of medical bills on consumer reports.