Federal: AFC Comment Letter to CFPB on Notice of Proposed Rulemaking regarding its Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information

The Honorable Rohit Chopra

Director

Consumer Financial Protection Bureau

1700 G Street NW,

Washington, DC 20552

Re:       Notice of Proposed Rulemaking regarding its Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information

Dear Director Chopra,

On behalf of The American Fintech Council (AFC),^[1] I am submitting this comment letter in response to the Consumer Financial Protection Bureau’s (CFPB or the Bureau) Notice of Proposed Rulemaking regarding its Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information(Proposed Rulemaking).

AFC’s mission is to promote an innovative, transparent, inclusive, and customer-centric financial system by fostering responsible innovation in financial services and encouraging sound public policy. AFC members are at the forefront of fostering competition in consumer finance and pioneering ways to better serve underserved consumer segments and geographies. Our members are also improving access to financial services and increasing overall competition in the financial services industry by supporting the responsible growth of lending and lowering the cost of financial transactions, allowing them to helpmeet demand for high-quality, affordable financial products.

AFC recognizes and agrees with the importance of ensuring that existing consumer debts, both medical and non-medical, are properly reported into the credit system. However, pursuing an outright ban of providing information on medical debts presents a concerning blind spot for lenders seeking to ensure that consumers are not overburdened with debt.

In practice, the removal of all medical debt information from consumers credit profiles would impair a lender’s assessment of a consumer’s ability to repay the loan, which could result in a consumer taking on more debt than they can handle and would inject unnecessary default risk into the financial system. If finalized as written, the Proposed Rulemaking could both push lenders to pursue more conservative lending practices to ensure they are not unknowingly overburdening consumers with debt and take on unnecessary credit risks by serving those who might have medical debt, which would not align with existing safety and soundness requirements from the federal prudential regulators.^[2] In short, both consumers and lenders would be harmed by the outright ban of medical debt information in a consumer’s credit profile.

As AFC’s mission notes, we seek to promote a transparent, inclusive, and consumer-centric financial system. To inject unnecessary opacity into the credit reporting system as the Proposed Rulemaking has done, and to do so in a manner that would result in a less consumer-centric financial system causes great concern for AFC and its members vis-à-vis the Bureau’s statutory obligations to ensure that markets for consumer financial products and services operate in a fair, transparent, and competitive manner,^[3]and stands in contrast to the Bureau’s efforts to protect consumers from financial abuse and ensure fair and transparent markets for consumer financial products and services. To that end, AFC is compelled to recommend that the Bureau reconsider the provisions outlined in the Proposed Rulemaking and instead dedicate the its resources to developing processes and practices that will ensure the proper reporting of medical debt.  

AFC appreciates the opportunity to comment on the CFPB’s Notice of Proposed Rulemaking regarding its Prohibition on Creditors and Consumer Reporting Agencies Concerning Medical Information. We thank you for your consideration of our comments.

Sincerely,

Ian P. Moloney

SVP, Head of Policy and Regulatory Affairs

American Fintech Council

[1] American Fintech Council’s (AFC) membership spans EWA providers, lenders, banks, payments providers, loan servicers, credit bureaus, and personal financial management companies.

[2] 12 CFR Part30—Safety and Soundness Standards.

[3] Public Law 111-203.