WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) continues to build on its success helping everyday consumers despite facing an existential crisis in the U.S. Supreme Court under a lawsuit brought by the predatory payday lending industry. After beginning a major crackdown on abusive credit card industry junk fees that has already saved consumers over $4.25 billion, this week the CFPB announced plans for a new rulemaking effort that would help more Americans get ahead by eliminating medical bills from credit reports.
Tens of millions of Americans are currently saddled with often-inaccurate medical debt that unfairly diminishes their credit health. Despite overwhelming data showing medical bills have negligible predictive value in credit decisions, a review from government watchdog Accountable.US found that top debt collection trade group ACA International has spent over $2 million on lobbying during the COVID-19 pandemic, including against efforts to address medical debt collections and credit reporting that are entrapping millions of Americans into financial turmoil and impacting their ability to improve their credit scores and access credit products and medical care. Adding insult to injury, the financial industry has sought to pad their profits by pushing high-cost financial products onto struggling Americans patients with medical debt, usually with interest rates often exceeding 25%.
The Consumer Financial Protection Bureau’s effort to scrub medical debt from credit reports would be a lifeline for many Americans trying to get above water, especially those recovering from sickness or injury,” said Jeremy Funk, spokesman for Accountable.US.
“No American should be kept from buying a new car or home because of a credit report smeared by often-inaccurate medical debt that has virtually no bearing on how financially responsible they are. Yet unscrupulous debt collectors notorious for fudging numbers and pinning debt on the wrong people have spent millions lobbying to keep the system broken in favor of higher profits. It’s another reminder why Americans benefit from having a strong independent consumer watchdog in their corner. If the Supreme Court sides with predatory lenders and allows the CFPB to be defanged and defunded, bad actors in the financial industry would see a giant green light to scam, cheat and rip off consumers,” Funk added.