After the end of the regulatory comment period last year on the federal Consumer Financial Protection Bureau’s (CFPB) proposal to essentially prohibit medical debt credit reporting, the question loomed: would we see this rulemaking move forward given the uncertainty a presidential election and transition can bring?
We received that answer shortly into the new year on January 7, 2025, when the CFPB advised that the rule would be published into the Federal Register on January 14, 2025, with an effective date of March 14, 2025. The new rule amends Regulation V, which implements the Fair Credit Reporting Act (FCRA) and directly prohibits a creditor’s access to and furnishing of a consumer’s medical information.
After learning the rule would be published, a top-notch industry association, ACA International, immediately acted on behalf of its members. On January 9, 2025, ACA International, along with a member collection agency, filed a lawsuit against the CFPB and Director Rohit Chopra, arguing against not only the merits of the rule but also delving deeply into the required procedures of rulemaking that were not followed when this was published.
This continues to be an extremely fast-moving and shifting situation with changes happening frequently, but here are some key points as they stand at the time of publication:
- On January 27, 2025, ACA International filed a Motion for a Preliminary Injunction within the filed lawsuit requesting a halt of the March effective date. While there were countless changes happening to the leadership and staff at the CFPB, the rulemaking remains on the Federal Register; therefore, the effective date of March 2025 was still looming. A similar motion was filed in a secondary lawsuit by the Consumer Data Industry Association (CDIA) and Cornerstone Credit Union League (Cornerstone) against the CFPB.
- President Trump relieved Director Chopra of his duties on February 1 and initially replaced him by naming Secretary of the Treasury Scott Bessent as the Acting Director. Shortly after assuming his role as Acting Director, Secretary Bessent ordered all CFPB work to pause, effectively putting all enforcement actions in limbo, including the amendment to Regulation V. Shortly thereafter, Director Russ Vought was confirmed to step in as the Acting Director at the CFPB. Acting Director Vought jumped into action, announcing that the CFPB would not access its funding from the Federal Reserve during the fiscal quarter, making a swift impact on the bureau and its staff.
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- A Stay Order was issued by the Eastern District of Texas on February 6, 2025, within the CDIA and Cornerstone case, which was significant as it moved the current effective date to June 15, 2025. The ACA’s motion is still pending in the other lawsuit, and that request includes a further stay to and including August 15, 2025.
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- While both lawsuits continue to move forward, there are also impactful actions happening within Congress, such as H.R. 77 – Midnight Rules Relief Act, which was introduced by Arizona Representative Andy Biggs. There were also similar Congressional Review Act (CRA) resolutions introduced on February 13, 2025, within the House and Senate, which specifically included language that would overturn the CFPB’s pending rulemaking.
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- In February, President Trump nominated a permanent director for the CFPB, former Federal Deposit Insurance Corporation board member Jonathan McKernan. Also in February, Federal Judge Amy Berman Jackson of the District Court for the District of Columbia issued a ruling that paused the actions taken to date to defund and deconstruct the CFPB’s workforce and operations. This order will remain in effect until at least March 3, 2025, while Judge Jackson hears arguments for a further injunction.
While there is still much uncertainty about what’s to come and about the future of the CFPB itself, Meduit will continue to support ACA International in the advocacy fight against this rulemaking. Given the noteworthy events of the last several weeks, Meduit is confident that the fight against this rule will be successful. We know that many are discussing when and how implementation of the rule should begin, but we strongly urge everyone to hold off on changing any policies, procedures, or practices. If you begin removing tradelines and the fight against the rule is successful, those removed tradelines cannot be added back. As always, it is important for each organization to seek its own compliance counsel, but it is our opinion that it is best to hold any action while we await further news ahead of the new June 15, 2025, effective date.