For Immediate Release
ACA International Communications Department
ACA International calls on bureau to research credit reporting changes to date before issuing proposed rule.
11/09/2023 1:00 P.M.
5 minute read
Washington, D.C. – November 9, 2023 – ACA International (“ACA”) has filed a comprehensive response (PDF) to the Consumer Financial Protection Bureau’s (“CFPB”) proposals for sweeping changes to the Fair Credit Reporting Act (“FCRA”), highlighting the harmful impact the proposal would have on consumers, especially low-income consumers, lenders, small businesses, and the entire economy and debt collection industry.
In September, the CFPB announced a complex Small Business Regulatory Enforcement Fairness Act (“SBREFA”) outline related to the FCRA and invited certain small entity representatives to respond to the proposal, which seeks to alter major parts of the credit reporting process and targets certain industries, such as medical providers. It did not include any medical providers despite the clear impact on their business.
The SBREFA was designed to give small businesses a voice in the development and enforcement of CFPB regulations.
“The CFPB appears to have a pre-determined outcome that it intends to move forward with the proposal, despite concerns raised by creditors, credit reporting agencies (“CRAs”), and the debt collection industry all providing evidence of significant disruptions in the market, as well as harm to consumers and small businesses if the CFPB moves forward,” said ACA CEO Scott Purcell. “The proposal, which includes, among other things, a directive to remove all medical debt from credit reports, would result in negative unintended consequences for medical providers and lenders throughout the country.”
Purcell continued in ACA’s comments:
“During the SBREFA panel, the CFPB on multiple occasions was not able to provide specifics or to define aspects of the proposal that were needed to give a conclusory response to estimates about the full impact on small businesses. Specifically, not knowing how the CFPB defines medical debt makes it nearly impossible to respond to a number of questions the CFPB poses. Since multiple stakeholders have indicated that the proposal could have a sweeping impact on the health care market, insurance coverage, and the larger economy, it is essential for the CFPB to solicit more comprehensive feedback from a variety of stakeholders and complete recent data driven economic analysis.”
Two ACA members were selected as small entity representatives to submit their feedback on the outline of FCRA proposals.
An economic analysis (PDF) of the CFPB’s FCRA rule proposal by Andrew Rodrigo Nigrinis, Ph.D., shows the bureau has yet to study whether providers will react by refusing to provide credit and cutting consumers off from health services, or by raising prices on all consumers and hurting everyone. Providers may also wind-up requesting cash up-front for co-pays and deductibles, hurting low-income community members who can’t afford to pay those all at once, thereby reducing their access to health care.
Since the CFPB announced the proposals earlier this year, ACA has worked to show the need for stakeholder involvement across all impacted industries, especially health care. ACA also advocated for extended timeframes to ensure stakeholders had time to respond, and to determine the CFPB’s authority under the FCRA to engage in rulemaking.
Following are some ways the CFPB’s FCRA proposals will have significant negative impacts and will violate existing law:
- The proposal conflicts with language in the FCRA concerning the definitions of “consumer report” and “consumer reporting agency.”
- The CFPB lacks authority to rewrite laws passed by Congress that are unambiguous by their plain terms.
- The data analysis supporting the proposal has serious methodological defects and did not consider data that reflects the current state of the industry or the critical economic impacts of medical debt reporting.
- The proposal will create overly burdensome costs for small businesses, which will likely result in the reduction of consumer choice, increased upfront costs and costs overall, and less access for patients to critical care services.
- The proposal fails to consider, and has done no research on, less expensive alternatives that avoid these significant constitutional problems and reduce monetary impacts on small businesses, consumers, and governments.
- By the CFPB’s own admission, medical debt information is less predictive, not “not predictive.” Thus, underwriters will have less information to make credit determinations if the CFPB moves forward with its goal to remove all medical debt from credit reports, and credit will be extended in situations when consumers do not have the ability to repay. Similar to the factors of the 2008 financial crisis, which led to the creation of the CFPB, lenders will be operating with blind spots and overlooking debt and legal obligations for consumers who are seeking credit.
ACA also highlighted several areas where the CFPB has conflicted itself with this proposal, including prior actions related to Buy Now Pay Later products and ability to repay requirements, that take the opposite view about creditors needing a full history of any activities of a borrower.
ACA also extensively outlined the likely negative impact the CFPB actions would have on patients, including increased costs, the need for more upfront payments, a temptation to forego health insurance, and a likely increase in litigation from hospitals and collection agencies. The comments also discuss how medical providers in rural and underserved areas will be disproportionately impacted.
ARM professionals and debt collectors work tirelessly to provide solutions and advocate on behalf of patients and medical providers to get insurance companies to pay the benefits that patients have paid for and are entitled to receive.
Debt collectors play a vital role in resolving medical debt and do their part every day to help make sure the insurance companies pay the right amount and assist consumers in resolving issues.
ACA International (ACA), the association of credit and collection professionals, is the largest membership organization in the accounts receivable management industry. Founded in 1939, ACA brings together third-party collection agencies, law firms, asset buying companies, creditors and vendor affiliates representing industry professionals. ACA produces a wide variety of products, services and publications, including educational and compliance-related information; and articulates the value of the accounts receivable management industry to businesses, policymakers and consumers. www.acainternational.org.