Locked and Loaded: CFPB Sets its Sights on Medical Debt

ARM entities servicing medical debt should pay close attention to the recent words and actions of the Consumer Financial Protection Bureau (CFPB)On March 1, 2022, the CFPB issued a press release announcing that it released a report in which it estimated $88 Billion Dollars in medical debt is shown on credit reports. This announcement was followed a few hours later with are release of CFPB Director Rohit Chopra's prepared remarks on medical debt collection

The report asserts that medical billing is "complicated and burdensome" and calls medical billing a "doom loop" which catches patients between medical providers and insurance companies. Of prime focus for the CFPB is the usage of credit reports to coerce a patient to pay a medical bill. In his prepared statement, CFPB Director Rohit Chopra, made his feelings on the issue clear stating, "I am concerned that the credit reporting system is being weaponized as a tool of coercion to get people to pay medical bills they may not even owe."

The report details how medical bills are often unexpected, and patients typically do not have the ability to shop for services.  Per the CFPB's findings, medical bills placed on credit reports can result in reduced access to credit, increased risk of bankruptcy, avoidance of medical care, and difficulty securing employment, even when the bill itself is inaccurate or erroneous. To correct this, the CFPB plans to hold credit reporting companies accountable and work with federal partners, including the Department of Health and Human Services to ensure patients are not coerced into paying more than the amount they owe through credit reports.

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