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: Consumer-protection chief Chopra eyes ban for medical debt on credit reports


The Consumer Financial Protection Bureau is considering barring credit reporting agencies from including medical debt on credit reports, according to the agency’s director, Rohit Chopra.

“In theory, credit reports are supposed to be an accurate repository of data about whether you have met your obligations on loans you have taken out. This theory is far from reality,” Chopra said during a virtual press conference Tuesday. “To make things worse, credit reports include items like unpaid medical bills, where patients frequently do not know what services will be performed and what they will be charged.”

“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,” Chopra added.

The statements accompany a new report issued by the CFPB estimating that there is $88 billion in medical debt on Americans’ consumer credit records as of June of last year, affecting about 20% of U.S. households. Meanwhile, the agency said that medical debt entries are less predictive of future payment problems than other sorts of debt in which consumers more knowingly take on.

“In many ways, it’s hard to call as medical debt a real debt,” Chopra said. “Few people choose to take on medical debt, and typically, patients have no idea how much they will be charged for a service or a procedure.”

Chopra called on the nation’s three largest credit reporting agencies — Equifax Inc.
Experian PLC

and TransUnion

to not include misleading medical debts on consumer reports and said that the CFPB “will be assessing whether it’s appropriate for unpaid medical billing data to be included on credit reports altogether.”

Diane Thompson, a senior adviser to Chopra, told reporters Tuesday that the Fair Credit Reporting Act, which is in part enforced by the CFPB, requires credit reporting agencies to have reasonable procedures in place to prevent inaccurate information from being included on credit reports.

“I think you’ll see reporting of medical debt that simply does not meet any reasonable procedures to ensure accuracy,” she said.

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