GOP lawmakers seek to repeal CFPB medical debt rule

Bloomberg News

Sen. Mike Rounds, R-S.D., on Wednesday filed a resolution to repeal a rule issued by the Consumer Financial Protection Bureau that would forbid medical bills from appearing on consumer credit reports. 

Rounds filed the resolution under the Congressional Review Act, which allows Congress to nullify any rule finalized within 60 legislative days by a simple-majority vote. When a final rule is rescinded under the CRA, the agency is barred from issuing a substantially similar rule in the future. 

Rounds said the medical debt rule exceeds the CFPB’s statutory authority because it seeks to change the Fair Credit Reporting Act, which explicitly allows consumer reporting agencies to include coded medical debt information in credit reports. 

“The CFPB going beyond their statutory authority to eliminate all medical debt from credit reports is irresponsible and a clear example of regulatory overreach,” Rounds said in a press release. “This rule gives credit card companies a less clear credit picture of who they’re lending money to, which could lead to banks limiting access to capital for consumers.”

The CRA resolution was co-sponsored by Senate Banking Committee Chairman Tim Scott, R-S.C., and Sens. Mike Crapo, R-Idaho; Bill Hagerty, R-Tenn.; and Cynthia Lummis, R-Wyo.

Rep. Norman Ralph, R-S.C., introduced a companion resolution in the House on March 6 to rescind the CFPB’s medical debt rule. That bill has 13 Republican co-sponsors. 

The CFPB’s medical debt rule — which was issued on Jan. 7 — would restrict credit reporting agencies from providing medical account information on credit reports. Consumers would still owe medical debts, but lenders would no longer see medical bills on credit reports and would be banned from considering medical debts in underwriting decisions. 

The CFPB was immediately sued on the same day it issued the rule by two trade associations that have claimed the bureau exceeded its statutory authority under the FCRA, and chose to ignore the legislative history of medical debts. 

In 1996, Congress prohibited medical debt from being reported to credit bureaus — but then reversed itself in 2003 and created an exception to allow medical debts to be reported with special coding that removed the names of medical providers and types of services.

Currently, nearly all CFPB rules that were issued in the past six months of the Biden administration have been put on hold, pending a review by the Trump administration.

Republicans in Congress have already advanced two Congressional Review Act resolutions that would nullify the CFPB’s overdraft rule, which would subject banks with $10 billion in assets or more to a $5 cap on overdraft fees in most cases; and a larger participant rule, subjecting large technology firms to supervision. Both actions were taken by the CFPB in the last months of the Biden administration. 

Last week, the House Financial Services Committee voted 30 to 19 to repeal the CFPB’s overdraft rule, with every Democrat voting no. The CRA resolution now goes to the full House later this month. An identical resolution has been introduced in the Senate Banking Committee by Chairman Tim Scott, R-S.C., and is expected to pass with support along Republican party lines. President Donald Trump is anticipated to sign the resolution into law. 

The Senate also is considering a CRA resolution on the CFPB’s larger participant rule led by freshman Sen. Pete Ricketts, R-Neb. The rule would allow the bureau to supervise digital payment platforms such as those run by Apple, Alphabet’s Google and Meta. 

Before 2017, the Congressional Review Act had been used successfully only once, in 2001, to overturn a rule setting federal ergonomic standards by the Occupational Health and Safety Administration. Since 2017, another 19 rules have been nullified via CRA resolutions: 16 in the 115th Congress, which was in session from 2017-2018, and three in the 117th Congress, which was in session from 2021-2022.  

The legislation overturning medical debt on credit reports is endorsed by the American Bankers Association, the U.S. Chamber of Commerce, ACA International, the Receivables Management Association International, the Online Lenders Association, the American Financial Services Association and the Innovative Lending Platform Association.