GOP Aims to Repeal CFPB Medical Debt Credit Report Ban (Correct)

Republican lawmakers are moving to eliminate a Biden-era Consumer Financial Protection Bureau rule barring medical debt from appearing on consumer credit reports.

Sen. Mike Rounds (R-S.D.) and Rep. Ralph Norman (R-S.C.) introduced legislation (S. J. Res. 36 and H. J. Res. 74, respectively) that would use the Congressional Review Act to repeal the CFPB’s medical debt rule.

“The CFPB going beyond their statutory authority to eliminate all medical debt from credit reports is irresponsible and a clear example of regulatory overreach,” Rounds said in a statement Tuesday after introducing the measure. Senate Banking Committee Chairman Tim Scott (R-S.C.) is among the original cosponsors of the disapproval resolution.

The 1996 Congressional Review Act gives Congress a 60-day window to repeal federal rules with a simple-majority vote in both chambers and the president’s signature. The clock resets in a new session of Congress for rules finalized toward the end of the previous congressional session. That means Republicans likely have until about May 7 to take advantage of the fast-track procedures, according to a Bloomberg Government analysis.

The CFPB’s medical debt rule, a Biden administration priority finalized in January, would improve credit scores by an average of 20 points, the CFPB estimated at the time. The agency said more than 15 million Americans have medical debt totaling around $49 billion on their credit reports.

“Being sick and having medical bills has little to do with whether people will pay their loan payments, but these members of Congress callously think it’s their job to allow medical debts to shut these folks out from access to credit or make credit more expensive for families struggling to make ends meet,” Chi Chi Wu, a senior attorney at the National Consumer Law Center who focuses on credit reporting issues, said in a statement Wednesday.

Critics of the rule, including Rounds, say lenders will have a harder time making informed decisions about the creditworthiness of borrowers if the medical debt reporting ban takes effect.

Repeal Efforts

The rule was supposed to take effect March 17. But the Trump administration, after firing CFPB Director Rohit Chopra at the end of January, ordered the agency to delay the effective date for finalized rules that hadn’t come into force.

A federal judge in Texas subsequently delayed the medical debt rule’s implementation date until June 15, unless the CFPB or Congress eliminate it first. The Feb. 6 order came in litigation from the Consumer Data Industry Association, a credit reporting industry group that sued to block the rule.

The medical debt rule is the fourth CFPB regulation so far to face a repeal effort in the 119th Congress.

The Senate voted last week (S. J. Res. 28) to repeal a CFPB rule that would’ve brought digital payment platforms operated by Apple Inc., Alphabet Inc., and Meta Platforms Inc. under agency supervision. That measure is now before the House, where a matching resolution (H. J. Res. 64) was introduced.

Congress is also considering CRA legislation to repeal the CFPB’s $5 overdraft fee cap. The House Financial Services Committee voted to advance the resolution (H. J. Res. 59) along party lines the same day the Senate passed the digital payments CRA measure. Scott sponsored the overdraft resolution in the Senate (S. J. Res. 18).

Another CRA measure (H. J. Res. 51) would overturn a rule from the CFPB and five other regulators aimed at preventing discriminatory data from being used in home appraisal automated valuation models.