The U.S. Supreme Court has delivered a significant ruling, affirming in a 7-2 decision that the Consumer Financial Protection Bureau (CFPB) can continue to receive funds through the Federal Reserve rather than through congressional appropriations. This ruling overturns a previous decision by a Louisiana federal appeals court that had questioned the bureau’s funding structure. Had it been upheld, the appeals court’s opinion could have considerably impacted the functionality of the CFPB. The full details can be found here.
This ruling holds particular significance due to the CFPB’s recent focus on the burgeoning issue of medical debt collection. A survey conducted by Peterson-KFF reveals that Americans collectively owe $220 billion in healthcare debt. In response, the CFPB has been working aggressively to introduce new regulations aimed at protecting patients from overzealous debt collectors, such as prohibiting the reporting of medical debt to creditors and other entities, which can adversely affect consumers’ credit scores. The CFPB’s announcement on the proposed rules can be reviewed here.
Moreover, the enforcement actions of the CFPB have extended to law firms involved in medical debt collection. An example includes a legal firm being ordered to furnish $577,135 in relief to consumers, in addition to a $78,000 penalty, emphasizing the bureau’s commitment to curbing aggressive debt collection tactics. Further details on this action are available here.
- New York, Colorado, California, and Minnesota have enacted or proposed legislation to exclude medical debt from consumer reports.
- New York City and Cook County, Illinois are pioneering initiatives to alleviate medical debt through partnerships with nonprofit organizations like RIP Medical Debt.
On the federal level, a coalition of legislators has introduced a bill aimed at eradicating all American-held medical debt. This follows a decisive move by the three largest credit bureaus—Equifax, TransUnion, and Experian—to remove settled medical debts from credit reports starting July 1, 2022. For more information, click here.
While some anticipated the Supreme Court to uphold the lower court’s ruling invalidating CFPB’s funding, the decision penned by Justice Clarence Thomas underscores the majority’s stance on the authority of the bureau’s funding mechanism. Justices Alito and Gorsuch dissented,; they criticized the funding structure as a constitutional circumvention. The comprehensive breakdown can be accessed here.