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CFPB Supports Connecticut Bill to Limit Reporting of Medical Debt

The Consumer Financial Protection Bureau (CFPB) has written a letter in support of a Connecticut bill that would prohibit healthcare providers in the state from reporting medical debt to consumer reporting agencies for use in a consumer report. 

The letter, which focuses on Connecticut State Senate Bill 395 (SB395), was addressed to State Sen. Matt Lesser and posted on the CFPB’s website Monday (April 15). 

“We commend work by states, such as the proposed SB395, to proactively protect Connecticut consumers against the harms of medical debt reporting,” Brian Shearer, assistant director at the Office of Policy Planning and Strategy at the CFPB, wrote in the letter. “States play a frontline role in protecting consumers from unscrupulous practices, including by enacting laws that go further than or reinforce federal protections.”

The letter noted that in 2022, the CFPB issued an interpretive rule explaining that states are generally permitted to enact state-level laws that provide consumer protections involving consumer reporting.

It added that in September, the agency announced a rulemaking process to prohibit the use of medical bills and collection information for underwriting decisions by creditors as well as the delivery of this information to creditors by credit agencies for use in underwriting. 

“As we have seen in so many other contexts, strong state action provides support for federal policymaking,” Shearer wrote in the letter. “SB395 would cement important protections against medical bill credit reporting into Connecticut law and provide state regulators with additional authority to prevent the inclusion of medical bills in credit reports.”

When announcing in September that it began a rulemaking process aimed at removing medical bills from Americans’ credit reports, the CFPB said about 20% of Americans currently have medical debt.

The agency added that its research has shown that including medical billing data on credit reports has less predictive value compared to traditional credit obligations because the complexity of medical billing practices, disputes over insurance payments and frequent mistakes contribute to the data’s unreliability.

In November, the CFPB issued a report saying that 15% of the complaints it received during the previous year were about debt collectors trying to settle an allegedly unpaid medical bill.