CFPB Makes New Changes to Credit Reports: Medical Bills Not Allowed

CFPB Highlights Legal Risks for Debt Collectors and Credit Bureaus Under the No Surprises Act

The Consumer Financial Protection Bureau (CFPB) has issued a bulletin reminding debt collectors and credit bureaus of their legal obligations under the No Surprises Act, a law designed to protect consumers from unexpected medical bills. The new rule goes into effect March 17th, 2025. The bulletin emphasizes that companies attempting to collect or report medical debts prohibited by the act may face significant legal consequences under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).

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TIP: Be careful not to let the debt go unpaid. The original medical provider may still sue you. Be sure to at least set up a payment plan and stick to it.

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Key Takeaways from the CFPB Bulletin:

1. Prohibition on Collecting Invalid Medical Debts:
   • Debt collectors are prohibited from misrepresenting the character, amount, or legal status of any debt. This includes attempting to collect charges exceeding the limits set by the No Surprises Act.
   • Collecting amounts not authorized by law or agreement is considered an unfair or unconscionable practice under the FDCPA.
2. Credit Reporting Obligations:
   • Credit bureaus and information furnishers must ensure the accuracy of consumer information related to medical debts.
   • They are required to follow reasonable procedures for dispute resolution and verify the accuracy of reported debts, especially those stemming from charges prohibited by the No Surprises Act.
3. Enforcement Actions:
   • The CFPB will investigate and take action against companies that attempt to collect or report invalid medical debts, reinforcing consumer protections against coercive practices.

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Statements from Leadership:

CFPB Director Rohit Chopra highlighted that surprise medical bills have burdened many Americans, often forcing them into financial hardship through credit report coercion. He stated, “Our action today should serve as a reminder not to collect on or furnish credit reporting information about invalid medical debt.”

Health and Human Services (HHS) Secretary Xavier Becerra called the No Surprises Act a milestone in consumer protection, noting its role in shielding patients from “eye-popping, bankruptcy-inducing medical bills” and supporting a fairer healthcare system.

Background on Medical Debt Challenges

• Medical debt remains a significant issue in the U.S., exacerbated by the COVID-19 pandemic. In 2021, 17% of adults faced major unexpected medical expenses, with median costs ranging between $1,000 and $1,999.
• A 2014 CFPB report revealed that over 43 million Americans had overdue medical debt on their credit reports, accounting for more than half of all overdue debt.

About the No Surprises Act

Effective January 1, 2022, the No Surprises Act protects consumers from surprise medical bills for emergency services and non-emergency care provided by out-of-network providers at in-network facilities. It also limits out-of-network cost-sharing and prohibits balance billing for certain services. The law applies to most private health insurance plans and establishes an independent dispute resolution process for payment disagreements between insurers and providers.

Implications for Real Estate Professionals

While this bulletin primarily addresses healthcare billing practices, it underscores broader consumer protection trends that could impact industries like real estate. For example:

• Ensuring compliance with federal laws related to financial transactions is critical.
• Understanding consumer rights can help professionals build trust with clients navigating financial challenges.

By staying informed about regulations like the No Surprises Act, real estate professionals can better support clients dealing with financial hardships tied to unexpected expenses like medical debt.

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