Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V)

CONSUMER FINANCIAL PROTECTION BUREAU <CFR>12 CFR Part 1022</CFR> <DEPDOC>[Docket No. CFPB-2024-0023]</DEPDOC> <RIN>RIN 3170-AA54</RIN> <SUBJECT>Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information (Regulation V)</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Consumer Financial Protection Bureau. <HD SOURCE="HED">ACTION:</HD> Proposed rule; request for public comment. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Consumer Financial Protection Bureau (CFPB) is seeking public comment on a proposed rule amending Regulation V, which implements the Fair Credit Reporting Act (FCRA), concerning medical information. The CFPB is proposing to remove a regulatory exception in Regulation V from the limitation in the FCRA on creditors obtaining or using information on medical debts for credit eligibility determinations. The proposed rule would also provide that a consumer reporting agency generally may not furnish to a creditor a consumer report containing information on medical debt that the creditor is prohibited from using. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before August 12, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments, identified by Docket No. CFPB-2024-0023 or RIN 3170-AA54, by any of the following methods: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments. A brief summary of this document will be available at <E T="03">https://www.regulations.gov/docket/CFPB-2024-0023.</E> • <E T="03">Email: 2024-NPRM-MEDICAL-DEBT@cfpb.gov.</E> Include Docket No. CFPB-2024-2023 or RIN 3170-AA54 in the subject line of the message. • <E T="03">Mail/Hand Delivery/Courier:</E> Comment Intake—2024 NPRM FCRA Medical Debt Information, c/o Legal Division Docket Manager, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. <E T="03">Instructions:</E> The CFPB encourages the early submission of comments. All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to <E T="03">https://www.regulations.gov.</E> All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> George Karithanom, Regulatory Implementation & Guidance Program Analyst, Office of Regulations, at 202-435-7700 or <E T="03">https://reginquiries.consumerfinance.gov/.</E> If you require this document in an alternative electronic format, please contact <E T="03">CFPB_Accessibility@cfpb.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> <HD SOURCE="HD2">A. Rulemaking Goals</HD> Information about a person's medical history and health is sacrosanct and among the most intimate and sensitive categories of data. Recognizing the uniquely sensitive nature of such information, Congress acted to limit the use and sharing of medical information in the financial system. <SU>1</SU> <FTREF/> Congress did so in order to “establish strong privacy protections for consumers' sensitive medical information,” in line with the overarching privacy protection purpose of the Fair Credit Reporting Act (FCRA). <SU>2</SU> <FTREF/> As part of these protections, Congress restricted a creditor's ability to obtain or use a consumer's medical information in connection with any determination of the consumer's eligibility, or continued eligibility, for credit. <SU>3</SU> <FTREF/> A number of concerns have been raised about whether a regulatory exception that permits creditors to consider sensitive medical information about a consumer's debts and certain other types of medical information is consistent with the congressional intent to restrict the use of medical information for inappropriate purposes. <FTNT> <SU>1</SU>  Fair and Accurate Credit Transactions Act of 2003 (FACT Act), Public Law 108-159, 117 Stat. 1952, 1999 (2003). </FTNT> <FTNT> <SU>2</SU>  15 U.S.C. 1681 <E T="03">et seq.,</E> 1681(a)(4); 149 Cong. Rec. H8122-02, H8122 (daily ed. Sept. 10, 2003) (statement of Rep. Kanjorsky). </FTNT> <FTNT> <SU>3</SU>  15 U.S.C. 1681b(g)(2). </FTNT> For tens of millions of consumers, medical debt is an unexpected and unwanted expense that can lead to financial hardships. The CFPB is proposing this rule to address concerns that information about medical debt is not necessary and appropriate for credit underwriting and, as a result, does not warrant an exception to the medical information privacy protections established by Congress. Due to the complexity of medical billing, information about medical debt is often plagued with inaccuracies and errors. Third-party reimbursement processes, and debt collectors' practices for providing (or furnishing) information on consumers' debts to consumer reporting agencies, can contribute to the prevalence of errors and consumer confusion about their medical bills. <SU>4</SU> <FTREF/> This can uniquely affect not just the accuracy of the information a creditor may consider about a medical debt, but also a consumer's understanding of whether, when, or in what amount, a medical bill must be paid. Many consumers do not find out about an erroneous medical bill in collections until applying for a mortgage or car loan and being denied for the loan based on their consumer report. <SU>5</SU> <FTREF/> <FTNT> <SU>4</SU>   <E T="03">See</E> Consumer Fin. Prot. Bureau, <E T="03">Consumer credit reports: A study of medical and non-medical collections,</E> at 15-16, 38-49 (Dec. 2014), <E T="03">https://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit-medical-and-non-medical-collections.pdf</E> (discussing billing and collection practices for medical debt generally, in discussion of medical collections tradelines on consumer reports). </FTNT> <FTNT> <SU>5</SU>  This document uses the term “consumer report” which has the meaning provided in section 603(d) of the FCRA, 15 U.S.C. 1681a(d). “Consumer report” is also commonly referred to as “credit report.” </FTNT> Research has shown that medical debt has limited predictive value for credit underwriting purposes. Questions about the reliability of information about medical debt, as compared to information about other types of consumer debt, have been raised based on research performed by the CFPB and others. <SU>6</SU> <FTREF/> Medical debt may be less predictive of whether a consumer will pay a future loan, because medical debts can occur and are collected through unique circumstances and practices. For example, consumers often have limited ability to control the timing and types of medical services that are required. <FTNT> <SU>6</SU>   <E T="03">See, e.g.,</E> Kenneth P. Brevoort & Michelle Kambara, Consumer Fin. Prot. Bureau, <E T="03">Data point: Medical debt and credit scores</E> (May 2014), <E T="03">https://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debt-credit-scores.pdf. See also</E> Mark Rukavina, <E T="03">Medical Debt and Its Relevance When Assessing Creditworthiness,</E> 46 Suffolk U. L. Rev. 967 (2013), <E T="03">https://bpb-us-e1.wpmucdn.com/sites.suffolk.edu/dist/3/1172/files/2014/01/Rukavina_Lead.pdf.</E> </FTNT> Because consumer reports can operate as a gatekeeper to significant life and economic decisions, medical debt can be used as leverage by debt collectors to coerce consumers to pay medical bills they may not owe. <SU>7</SU> <FTREF/> In such circumstances, consumers are forced to choose between challenging inaccurate medical bills, often while recovering from a serious illness, or paying the inaccurate bill due to a frequently short review period. <FTNT> <SU>7</SU>   <E T="03">See, e.g.,</E> Consumer Fin. Prot. Bureau, <E T="03">Fair Debt Collection Practices Act: CFPB Annual Report 2023,</E> at 2-5 (Nov. 2023), <E T="03">https://files.consumerfinance.gov/f/documents/cfpb_fdcpa-annual-report_2023-11.pdf</E> (describing consumer medical collection complaints received by the CFPB). </FTNT> Market participants, including in the consumer reporting industry and those most financially incentivized to assess the predictive value of medical debt, have reduced their reliance on medical debt in recognition of its limited utility. Consumer reporting agencies have removed certain medical debts from consumer reports. <SU>8</SU> <FTREF/> Major credit scoring companies have accorded less weight to, or excluded entirely, medical debt information in their newer models. <SU>9</SU> <FTREF/> Similarly, some creditors have adjusted how their underwriting standards treat medical debt information. <SU>10</SU> <FTREF/> <FTNT> <SU>8</SU>   <E T="03">See, e.g.,</E> Business Wire, <E T="03">Equifax, Experian, and TransUnion Support U.S. Consumers With Changes to Medical Collection Debt Reporting</E> (Mar. 18, 2022), <E T="03">https://www.businesswire.com/news/home/20220318005244/en/Equifax-Experian-and-TransUnion-Support-U.S.-Consumers-With-Changes-to-Medical-Collection-Debt-Reporting.</E> </FTNT> <FTNT> <SU>9</SU>   <E T="03">See</E> AnnaMaria Andriotis, <E T="03">Major Credit-Score Provider to Exclude Medical Debts,</E> Wall St. J. (Aug. 10, 2022), <E T="03">https://www.wsj.com/articles/maj ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 439k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━