Republican senators have introduced a Congressional Review Act resolution to nullify the rule that bans banks and credit unions from including medical debt on credit reports and generally prohibits the use of medical information in credit decisions.
That CFPB rule was issued on January 7, 2025, less than two weeks before President Biden left office.
Sen. Mike Rounds, R-S.D. introduced S. J. Res 36, which also is cosponsored by Senate Banking Committee Chairman Sen. Tim Scott, R-S.C. The resolution, filed under the CRA, may be passed by a simple majority in the House and Senate. It would not be subject to a filibuster in the Senate.
“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. “This rule gives credit card companies a less clear credit picture of who they’re lending money to, which could lead to banks limiting access to capital for consumers.”
He said the rule goes beyond the CFPB’s rulemaking authority by banning practices that were expressly permitted under the Fair Credit Reporting Act, he added.
Rep. Ralph Norman, R-S.C., has introduced H.J. Res 74, a companion resolution in the House. That legislation also seeks to nullify the rule.
“Medical debt is a serious challenge for many Americans, but this rule will do nothing to address the underlying issues,” Scott said. “Instead, it will reduce access to credit and important health care services for those most in need.”
The rule also is the subject of two lawsuits.
In the first suit, filed in the U.S. District for the Eastern District of Texas, the Consumer Data Industry Association (CDIA) and the Cornerstone Credit Union League, said the CFPB exceeded its authority in issuing the rule. The CDIA, headquartered in Washington, D.C., represents national and regional credit bureaus. The Cornerstone Credit Union League, headquartered in Plano, Texas, represents almost 600 credit unions, including those in Texas.
In their suit, the groups contended that “In the waning days of the Biden Administration, the CFPB upends the carefully balanced framework established by Congress with a Final Rule that plainly exceeds its statutory authority.”
In the second suit, filed in the U.S. District Court for the Southern District of Texas, ACA International, an association representing third-party collection agencies, law firms, asset buying companies, creditors, and vendor affiliates, headquartered in Minneapolis, Minnesota, and Specialized Collection Services Inc., a woman-owned small collection agency specializing in the collection of medical debt, with a principal place of business in Harris County, Texas, also contend that the CFPB has exceeded its authority in issuing the rule.
The CFPB is taking advantage of peoples’ frustration with medical bills, according to the groups. “A federal agency with no healthcare experience is exploiting this frustration by making a politically motivated regulation that prevents credit reporting agencies from showing accurate medical debts on credit reports,” they asserted in the suit. “No agency has the power to do that.”
The groups give several reasons for asking that the rule be blocked, including that, “The Final Rule is not based on reasoned decision-making, but rather political ideology.”