On February 6, the U.S. District Court for the Eastern District of Texas issued a stay, delaying the implementation of the Consumer Financial Protection Bureau’s (CFPB) new regulation regarding medical debt on consumer credit reports by 90 days.
Initially scheduled to take effect on March 17, this rule will now be pushed back to June 15.
The Purpose of the CFPB’s Regulation
The purpose of the CFPB’s regulation is to stop consumer reporting agencies from including unpaid medical bills on credit reports and to prevent lenders from considering medical debt when assessing a borrower’s creditworthiness.
However, the delay stems from pushback by industry trade groups, who argue that the CFPB has overstepped its legal boundaries under the Fair Credit Reporting Act (FCRA).
Impact of the Delay
This temporary reprieve means that the CFPB’s intended changes to regulation are on hold for now, but the future of this measure remains uncertain, especially with leadership shifts within the CFPB itself.
After initially planning for the rule to become effective 60 days after its publication in the Federal Register, the newly appointed Acting Director, Scott Bessent, has since paused the activation of all final rules that were published but not yet enforced.
Future Considerations
Any revisions to these rules will involve adhering to the Administrative Procedure Act (APA), which requires a formal notice-and-comment process.
Furthermore, scrutiny under the Congressional Review Act could challenge the rule’s validity.
As developments unfold in this legal landscape, consumer reporting agencies should stay proactive.
The ongoing changes might lead to further delays or potentially jeopardize the rule altogether.
Source: Natlawreview