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Financial Services Law Insights and Observations

CFPB issues guidance on medical debt covered by the NSA

Federal Issues CFPB FCRA FDCPA Regulation V Credit Reporting Agency No Surprises Act Debt Collection

Federal Issues

On January 13, the CFPB released a new Bulletin to remind debt collectors and credit reporting agencies (CRAs) of their legal obligations under the FDCPA and the FCRA when collecting, furnishing information about, and reporting medical debts covered by the No Surprises Act (NSA). Effective for plan years beginning on or after January 1, 2022, the NSA establishes new federal protections against surprise medical bills arising out of certain out-of-network emergency care. The CFPB notes that medical debt often poses special risks to consumers as consumers are “rarely informed of the costs of medical treatment in advance” and are “generally ill suited to the task of identifying [medical] billing errors.” Specifically, the Bulletin reminds debt collectors of the FDCPA prohibition against “false representation of the ‘character, amount, or legal status of any debt’” and the use of any “unfair or unconscionable means to collect or attempt to collect any debt.” According to the Bulletin, these would include “misrepresenting that a consumer must pay a debt stemming from a charge that exceeds the amount permitted by the [NSA].” The Bulletin also reminded debt collectors, as furnishers of information to CRAs, and the CRAs themselves of their obligations under the FCRA to assure the accuracy of information furnished or included in a consumer report, as well as to “conduct reasonable and timely investigations of consumer disputes to verify the accuracy of furnished information.” The Bulletin clarified that the accuracy and dispute obligations imposed by the FCRA “apply with respect to debts stemming from charges that exceed the amount permitted” by the NSA. The Bulletin further offered several examples of acts or practices that may be violative of the FDCPA and/or the FCRA in connection with medical debt covered by the NSA. According to the Bulletin, the CFPB “will hold debt collectors accountable for failing to comply with the FDCPA and Regulation F, and it will hold CRAs and furnishers accountable for failing to comply with the FCRA and Regulation V.” The Bureau also noted that it “will continue to work with the U.S. Department of Health and Human Services and other partners to address medical debt abuses.”