On July 14, the Consumer Financial Protection Bureau (CFPB or Bureau) filed a status report announcing its decision not to reissue its Medical Debt Collection Advisory Opinion, which had been issued in 2024 to “remind debt collectors of their obligations to comply with the Fair Debt Collection Practices Act [FDCPA] and Regulation F’s prohibition on false, deceptive, or misleading representations or means in connection with the collection of any medical debt and unfair or unconscionable means to collect or attempt to collect any medical debt.” The Advisory Opinion had been challenged in the U.S. District Court for the District of Columbia by ACA International and Collection Bureau Services, Inc.
This decision comes as part of the CFPB’s broader initiative to withdraw numerous policy statements, interpretive rules, advisory opinions, and other guidance documents (previously discussed here). The CFPB’s decision also comes in the wake of the Eastern District of Texas’ entry of a consent judgment vacating the CFPB’s recently enacted rule that purported to ban consumer reporting agencies from including medical debts on consumer reports.
Background of the Lawsuits
The lawsuit, filed by ACA International and Collection Bureau Services, Inc., challenged the CFPB’s Advisory Opinion as an overreach of authority and a legislative rule that bypassed the Administrative Procedure Act (APA). The plaintiffs argued that the Advisory Opinion imposed new rules on debt collectors and the healthcare billing industry without evidentiary basis, public input, or compliance with mandatory federal administrative statutes. They contended that the CFPB’s actions exceeded its statutory authority under the FDCPA and Consumer Financial Protection Act, and that the Advisory Opinion should be set aside.
A related legal challenge also occurred in the Eastern District of Texas, where Cornerstone Credit Union League and Consumer Data Industry Association challenged the CFPB’s rule that prohibited medical debt from being included on credit reports. The trade organization plaintiffs challenged that rule as exceeding the CFPB’s rulemaking authority, including because it was inconsistent with express provisions of the FCRA that permit the reporting of medical debt. After the change in the administration, the CFPB agreed to the entry of a consent judgment acknowledging that the rule exceeded its rulemaking authority. Several consumer advocacy groups intervened to object to the consent judgment in defense of the rule. Nonetheless, on July 11, the Eastern District of Texas entered the consent judgment over the intervenor’s objections, finding that the medical debt rule was “irreconcilable” with the FCRA’s plain text and therefore exceeded the CFPB’s authority. In this decision, the court also opined that in the same way the CFPB does not have authority to prohibit what a federal statute expressly allows, state law does not have that authority either, and any such state law attempting to do so would be preempted.
CFPB’s Statement
According to the CFPB’s filing in the in the U.S. District Court for the District of Columbia, the CFPB determined that the challenged Advisory Opinion provided examples of compliance with the FDCPA, but that it lacked clarity on whether these examples were exhaustive or guaranteed compliance in all circumstances. Additionally, the Office of Management and Budget classified the Advisory Opinion as a “major rule,” potentially imposing costly requirements on medical debt collectors. The CFPB acknowledged that a notice-and-comment rulemaking process would have been preferable to ensure clearer compliance guidance and consider the impact on small businesses. For those reasons, the CFPB has stated its intention to withdraw the Advisory Opinion.
Implications
The CFPB’s decision to withdraw the Advisory Opinion led the plaintiffs to voluntarily dismiss their claims in the in the U.S. District Court for the District of Columbia, without prejudice. As the CFPB continues to review its guidance documents and change its enforcement and rulemaking strategies, stakeholders in the debt collection, healthcare, and consumer reporting sectors should remain prepared for potential changes in regulatory requirements.
