Debt Collectors Sue CFPB Over Medical Debt Rules

Debt collectors have filed a lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB) advisory opinion on medical debt collection, sayiing the agency overstepped its bounds.

The CFPB’s guidance emphasizes that companies using third-party consumer reports—including background checks and AI-generated scores—must adhere to the Fair Credit Reporting Act (FCRA). This includes obtaining worker consent, providing transparency about data used in adverse decisions, and allowing workers to dispute inaccurate information.

The debt collectors group — ACA International — argues that the advisory violates the Administrative Procedure Act, basically saying that the CFPB didn’t have the authority to issue the guidance.

The action reflects ongoing tensions between the CFPB and debt collection agencies over regulatory measures aimed at protecting consumers. The outcome could significantly impact how medical debts are collected and reported, potentially influencing future CFPB policies and enforcement actions.

“ACA members are hardworking individuals who work to study and comply with dozens of consumer protection laws so they can serve their medical provider partners and their patients,” said ACA CEO Scott Purcell.

“The CFPB’s political election year rhetoric of ‘cracking down on predatory debt collection tactics’ being applied to simply performing our work (which results in helping patients and not hurting them), and coming up with creative ways to rewrite the law and twist the facts must stop, and ACA is taking action today to stop it.”

“Overtly political actions”

The Purcell said that in the weeks leading up to the Presidential election, the candidate for president, Vice President Kamala Harris, rather than the independent agency tasked with following the Administrative Procedure Act (“APA”), publicly released the plans for the rulemaking “cloaked as an advisory opinion.”

The ACA said the press release and advisory opinion on medical debt released on Oct. 1 serves as “another overstep by the CFPB in its required regulatory processes under the APA, such as issuing a notice of proposed rulemaking and allowing for stakeholder comments.”

In a White House press release issued on Oct. 1, Harris said the CFPB’s action was intended to relieve financial pressure on patients and their families.

“As someone who has spent my entire career fighting to protect consumers, I am proud to announce today’s new actions to build on our work to reduce the burden of medical debt by increasing pathways for relief and cracking down on predatory debt collection tactics,” Harris said.

Purcell said the CFPB “is attempting to regulate the health care industry, which is not in its congressional mandate, in a backdoor way by expecting the debt collection industry to independently evaluate the reasonableness of a medical bill prior to making a collection attempt.”