CFPB Proposes Rule Amending FCRA Treatment of Medical Debt Information

The CFPB recently released a draft proposed rule that, among other things, would further limit the ability of creditors to use medical debt information when making underwriting decisions, and would limit how credit reporting agencies can furnish such information.  The CFPB has issued this proposed 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.”  Comments on the proposed rule are due on or before August 12, 2024.

Currently, FCRA’s Regulation V permits creditors to obtain and use medical information pertaining to a consumer in connection with any determination of the consumer’s eligibility for credit, provided that (among other things) the information is routinely used in making credit eligibility determinations, such as information relating to debts, expenses, income, benefits, assets, collateral, or the purpose of the loan.  The proposed rule would remove this provision, and would further limit how medical information related to income may be considered.  

The proposed rule further would provide a formal definition for “medical debt information” that would generally include medical information regarding “debt owed by a consumer to a person whose primary business is providing medical services, products, or devices, or to such person’s agent or assignee, for the provision of such medical services, products, or devices.”  The preamble to the proposed rule clarifies, however, that this would not include debt owed to a third-party lender (such as a medical credit card issuer) from whom a consumer took out a loan to pay medical expenses or bills.

The proposed rule would also clarify that credit reporting agencies may only furnish medical debt information if the consumer reporting agency:

• Has reason to believe the creditor intends to use the medical debt information consistent with the exceptions to the creditor prohibition; and
• Is not otherwise prohibited from furnishing to the creditor a consumer report containing the medical debt information, including by a State law that prohibits furnishing to the creditor a consumer report containing medical debt information.

These and additional elements of the proposed rule can be found in the Federal Register.