Congress Considers Amendment to the FCRA to Exclude Paid Medical Debts from Credit Reports

Troutman Pepper
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Troutman Pepper

On March 11, U.S. Representative Patrick McHenry (R-NC) reintroduced a bill to amend the Fair Credit Reporting Act (FCRA). H.R. 1645, the Protecting Consumer Access to Credit Act, would remove from a consumer’s credit report all paid, non-elective medical debt, and negative information judicially determined to have resulted from predatory lending or financial abuse. The amendment also would prevent consumer reporting agencies (CRAs) from using a consumer’s Social Security number for verification purposes and grants authority to the Consumer Financial Protection Bureau (CFPB) to oversee the cybersecurity efforts of CRAs.

Rep. McHenry, the ranking member of the House Financial Services Committee, stated the purpose of the bill is to provide American consumers with “[a]n accurate and secure credit profile.” The move to prevent reporting of paid medical debts and negative information resulting from “financial abuse” has also been seen in state-level legislative initiatives — an effort that one federal court last year held was preempted by the FCRA. According to Rep. McHenry, “[T]hese commonsense reforms to FCRA are needed now more than ever as we exit the pandemic and work to ensure all Americans can take part in our nation’s recovery.”

Another important aspect of the bill is the provision that would prevent CRAs from using Social Security numbers as a means of verifying a consumer’s identity. This provision is surprising, given that Social Security numbers are one of the most accurate means of identification. This provision, and the provision granting the CFPB oversight authority over CRAs’ cybersecurity efforts, attempt to “secure Americans’ most personal information at a time when cybersecurity risks are at an all-time high,” according to Rep. McHenry.

Some sources have pointed out a lack of clarity in the scope and language of the bill. ACA International, the Association of Credit and Collection Professionals, stated in a letter to Rep. McHenry that though it supports the bill’s intent, “this legislation might benefit from further clarification on what medical debt is considered non-elective.” The organization further expressed concern regarding the provision preventing CRAs from using Social Security numbers for verification purposes, urging Rep. McHenry to “conduct some additional outreach on the practical implications of this part of the legislation.”

Troutman Pepper will continue to monitor the progress of this bill and other legislative efforts related to consumer reporting and the FCRA.

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