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American Financial Services Association

This NPRM Needs a Second Opinion

This NPRM Needs a Second Opinion

The Consumer Financial Protection Bureau (CFPB) today announced a Notice of Proposed Rulemaking(NPRM) aimed at addressing the reporting of medical bills on credit reports. This initiative follows the CFPB’s September 2023 announcement to explore options for restricting such reporting practices.

The CFPB’s NPRM highlights the importance of accurate credit reporting that ensures both a safe and sound credit marketplace for consumers and the consumer credit industry that serves them. To achieve this worthy goal is credit reporting that enables creditors to have a comprehensive picture of a prospective borrower’s financial status so that creditors can evaluate the risk of extending credit and consumers’ ability to repay. This, in turn, protects the consumer from facing harmful financial consequences that hinder their future credit capacity and creditworthiness. However, today’s announced NPRM as implemented would not create greater certainty for either creditors or consumers.

At the same time, this also NPRM creates unnecessary confusion. On the one hand, the notice requires that legally reportable medical debt be removed from credit reports, while on the other the CFPB is taking enforcement action against creditors for not collecting enough financial information from prospective borrowers, such as their monthly expenses for groceries and what they payout for childcare.

While we appreciate the Bureau’s effort to use traditional rulemaking in this process, rules of the road that send conflicting messages are unhelpful and counterproductive.  Rulemaking that puts in place clear rules that protect consumers and ensure a safe and sound marketplace with greater access to credit for all consumers would best serve all stakeholders in this process.

June 11th, 2024

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