Latest news with #ConsumerFinancialProtectionBureau
Canada News.Net
3 days ago
- Business
- Canada News.Net
CFPB paralyzed as staff paid to wait, mission dismantled under Trump
NEW YORK CITY, New York: For the last six months, the Consumer Financial Protection Bureau (CFPB) has been issuing pay cheques to its staff who have been ordered not to perform their duties, leaving the bureau idle in all but name. The CFPB, established 15 years ago to police banks and financial service providers, has been instrumental in returning some US$21 billion to consumers harmed by predatory practices. Now, the agency's core mission is being dismantled under new leadership, with staff stuck in limbo—paid but prohibited from acting. "It feels like we're just waiting," said one current employee, who spoke anonymously due to restrictions on speaking publicly. "We show up, check emails, and try not to talk too much. Even small conversations feel risky." Ten current and former employees, along with industry professionals who once worked closely with the bureau, painted a similar picture: internal communication has all but stopped, and staff feel adrift. The press office no longer responds to inquiries. While the CFPB dialed back its enforcement under President Donald Trump's first term, it still pursued some consumer protection cases. That shifted under President Joe Biden, when the bureau cracked down on excessive bank fees and probed the growing role of Big Tech in financial services, securing penalties from companies like Apple. However, the recent return of Trump's influence has reversed course dramatically. The Department of Government Efficiency—now overseen by Elon Musk—called for the CFPB's shutdown, and acting chief Russell Vought ordered employees not to carry out any job-related tasks. The courts temporarily blocked an effort to lay off 1,500 employees, but insiders worry that further cuts are imminent. Some enforcement actions have already been rolled back. Navy Federal Credit Union, for instance, was allowed to withdraw from an $80 million settlement over unlawful overdraft fees. Toyota also avoided penalties related to questionable loan practices. The bureau's productivity has plummeted. According to a report by Senator Elizabeth Warren, the CFPB now processes just 2,200 consumer complaints per day, down from around 10,500 before the policy shift. There have been rare exceptions. The bureau recently settled a case with FirstCash, a national pawn chain, over illegal high-interest loans to service members, resulting in a $9 million fine. However, with looming budget cuts that could slash funding in half, such enforcement actions may become even rarer. Inside the bureau, morale has cratered. As one employee put it, each week brings "mini-funerals" as colleagues resign rather than endure the uncertainty. For those who remain, the days are quiet, the work is scarce, and the future is uncertain. "I don't think I'll ever work in public service again," said one current employee, who has been looking for a new job for the past three months.
New York Times
4 days ago
- Business
- New York Times
Judge Scraps Rule Eliminating Medical Debt on Credit Reports
In another blow to Biden-era financial regulations, a federal judge has blocked a rule that would have removed medical debts from millions of Americans' credit reports. The Consumer Financial Protection Bureau finalized the rule in early January, shortly before President Trump took office. The bureau estimated that the rule, which prohibited credit bureaus from including medical debt in the reports and scores sent to lenders, would have removed $49 billion in medical bills from the credit reports of 15 million Americans. Credit reports are used by lenders to make decisions about whether to approve loans for homes, cars and small businesses. Before the rule took effect, two trade groups credit bureaus and credit reporting agencies sued to block it, arguing that the bureau had exceeded its authority. They filed the lawsuit in the U.S. District Court for the Eastern District of Texas, a popular venue for litigation challenging the federal government's reach. Under the Biden administration, the agency fought the lawsuit, but once Mr. Trump returned to the White House, the new leaders he installed to oversee the consumer bureau reversed course. In April, the bureau joined the trade groups in asking the federal court to strike down the agency's regulation. Last Friday, the court granted their request. Judge Sean D. Jordan wrote that he agreed with the trade groups' argument that the consumer bureau's rule conflicted with Fair Credit Reporting Act, which governs consumer credit reports. That federal law allows lenders and credit reporting agencies to use financial information related to medical debts, and the bureau exceeded its authority by 'fashioning a new regulatory scheme that conflicts with the plain text' of the existing law, the judge wrote. The Consumer Data Industry Association, a plaintiff in the lawsuit to block the rule, praised the judge's decision. 'Information about unpaid medical debts is an important element in assessing a consumer's ability to pay. This is the right outcome for protecting the integrity of the system,' said Dan Smith, the group's chief executive. Want all of The Times? Subscribe.
Time Magazine
4 days ago
- Business
- Time Magazine
How to Limit Medical Debt's Impact on Your Credit
For the millions of Americans struggling to pay off the costs of expensive medical procedures, the looming debt is accompanied by another threat: that the unpaid medical bills could drag down their credit scores, making it harder to get a credit card or buy a home or car. And now a rule that would have addressed that issue will no longer be going into effect. In the final days of President Joe Biden's term, the Consumer Financial Protection Bureau (CFPB) issued a rule that would have removed medical debt from credit reports. The goal was to 'reduce the burden of medical debt and ensure that patients are not denied access to credit for home mortgages, car loans, or small business loans due to unpaid medical bills,' according to the White House press release at the time. But under the Trump Administration, the CFPB flipped its stance on the rule, which had not yet gone into effect. And on Friday, a federal judge, who was appointed by President Donald Trump, vacated the rule, stating that it exceeded the CFPB's authority under the Fair Credit Reporting Act. Roughly $88 billion of unpaid medical bills are in collections across the U.S., according to the CFPB, which estimates that the issue affects about one in five Americans. JoAnn Volk, a research professor and co-director of the Center on Health Insurance Reforms at Georgetown University, says the judge's ruling 'eliminates an important protection for families who are going to be shut out of credit because of this medical debt that they could not avoid.' How medical debt impacts credit CFPB research has indicated that medical debt on credit reports is 'a poor predictor' of whether a person will repay a loan, but still 'contributes to thousands of denied applications on mortgages that consumers would be able to repay,' the agency said at the time the Biden-era rule was finalized. 'We know from prior studies that medical debt does not have meaningful predictive power for people's credit worthiness. Part of the reason is that medical debt, more than any other form of debt, is the result of bad luck, not bad financial behavior,' says Neale Mahoney, an economics professor at Stanford University and director of the Stanford Institute for Economic Policy Research. 'Nobody plans to go to the hospital or have a kid slip and fall and need to be rushed to the ER and have to pay those medical bills; that is just bad luck.' The Biden-era rule would have led to the approval of about 22,000 additional, affordable mortgages annually, and the credit scores of people with medical debt on their credit reports would increase by an average of 20 points, the CFPB estimated. Mahoney says vacating it will reduce credit access for people struggling with medical debt. There are some steps that can be taken to mitigate that impact—though they're limited. Financial assistance options Mahoney advises people who find themselves faced with burdensome medical bills to first take advantage of their hospital's or physician's financial assistance program. Many hospitals have such programs, which are often listed on the back of the bill, that can reduce or sometimes even eliminate the cost depending on a patient's income or assets. 'It can be a slog to work through the process, but for many people, addressing the issue with the hospital is better than letting that issue fester and then become a medical debt with a debt collector,' Mahoney says. There are some organizations, like Dollar For, that help patients navigate these financial assistance programs. The CFPB offers some general tips for people dealing with medical debt, such as confirming the unpaid bill with the appropriate source, contacting their insurer if they believe the service should have been covered, and disputing any errors in the bill or credit report. Debt payment plans If a person's debt has been sold to a debt collector and they're concerned about its potential impact on their credit score, Mahoney recommends that they try and negotiate a payment plan with the debt collection company. Sometimes, a debt collector may be open to receiving a payment that is more within reach for the patient and, in turn, removing that debt from the credit report, he says.
Yahoo
5 days ago
- Business
- Yahoo
Judge nixes Biden-era rule removing medical debt from credit reports
This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter. Dive Brief: A federal judge has vacated a rule from the Biden administration that would have removed medical debt from credit reports, in a win for the credit reporting industry. Judge Sean Jordan, a Trump appointee, said that the rule exceeded the authority of the Consumer Financial Protection Bureau, an independent agency that's been carved out by cuts under the Trump administration. The CFPB had finalized the rule in January, weeks before former President Joe Biden left office. The Biden administration estimated the regulation, which never went into effect due to legal challenges, would have removed almost $50 billion of medical debt from the credit reports of some 15 million Americans. Dive Insight: Two credit reporting trade associations, the Cornerstone Credit Union and the Consumer Data Industry Association, sued to overturn the CFPB's rule earlier this year. The rule would cut into revenue such groups earn from training providers on how to submit medical debt data to credit reporting agencies. Credit reporting agencies also argued that the rule would make it hard for lenders to get an accurate picture of a consumer's financial status in making loan determinations. The hollowed-out CFPB under Trump declined to defend its regulation in court. Though a group of clinics and individuals with medical debt stepped up as intervening defendants in the litigation, their arguments were unsuccessful in swaying Jordan that the rule should go into effect. According to the judge, the Fair Credit Reporting Act of 1970 allows reporting agencies to include information about consumers' medical debt and lenders to consider such information when making credit decisions. The CFPB overstepped in seeking to prevent that, Jordan wrote in his Friday opinion. The judge's decision to vacate the rule is a stumbling block for those advocating to reduce the burden of medical debt. More than 100 million Americans struggle with medical debt, which is the largest source of debt in collection across the country, the Biden administration said in January. Roughly 1 in 12 adults have unpaid medical bills of $250 or above, according to an analysis from the Peterson Center on Healthcare and KFF last year. The bills can weigh on patients' credit scores, suppressing financial opportunities, patient advocates say. That's despite such bills being prone to errors and often the result of one-time medical emergencies, instead of evidence of long-term financial mismanagement. The rule was part of a larger effort from the Biden administration to crack down on medical debt. A handful of states have also tried to ease the burden of medical debt in recent years, including North Carolina and New Jersey. 'The facts are clear: Medical debt is not predictive of creditworthiness,' said Allison Sesso, the president and CEO of nonprofit Undue Medical Debt, in a statement Monday. 'This decision will hurt people's financial futures, including their ability to buy a home, care for their families, or even get a job — all because they got sick, injured or were born with a chronic condition through no fault of their own. It will also further decrease their willingness to get the care they need,' Sesso added. The pullback of the rule comes amid a larger Trump administration push to roll back the U.S. safety net, including steep Medicaid cuts in the 'One Big Beautiful Bill Act' passed earlier this month. An estimated 12 million people are expected to lose health insurance as a result of the bill. Recommended Reading New rule wipes medical debt from consumer credit reports
CBS News
5 days ago
- Health
- CBS News
5 ways to get medical debt off your credit report now
If you've been waiting for federal regulators to automatically wipe medical debt from your credit report, you might be waiting a while longer. This week, a federal court ruling struck down a Consumer Financial Protection Bureau (CFPB) rule that would have removed all medical debt from credit reports nationwide. The decision means millions of Americans will continue to see their credit scores dragged down by healthcare bills they're struggling to pay. The now-blocked rule would have had a big impact on those with lingering medical bills, as the CFPB estimated it would have boosted credit scores by an average of 20 points for millions of people, potentially opening doors to better mortgage rates, car loans and job opportunities. But it appears that medical bills will remain part of credit histories for now, so if you have unpaid medical debt remaining on your credit report, you'll need to take action yourself. What exactly can you do to keep medical debt from tanking your credit score, though? As it turns out, there are a few effective ways to get medical debt removed from your credit report. Find out how to start tackling your unpaid debt today. If medical bills are weighing down your credit or stressing your finances, the following strategies may help — and in some cases, could get the medical debt off your credit report entirely. Errors in billing and reporting are common in healthcare, so before doing anything else, you may want to request copies of your credit reports from Experian, Equifax and TransUnion to see what's being reported. If you spot medical debts you've already paid or don't recognize, file a dispute with the credit bureaus. Under federal law, the credit bureaus must investigate and remove unverifiable or incorrect debts within 30 days. This is often the fastest way to eliminate medical debt from your report if it doesn't belong there. Learn more about the debt relief solutions available to you now. If your medical debt has been sold to a collection agency, you may be able to negotiate a debt settlement and have a portion of your balance forgiven. Many debt collectors are open to settling for less than the full amount owed, and debt settlement lowers the balance by 30% to 50% on average. So, if you can afford to pay a portion of the medical bill, it may be worth pursuing this route. Just make sure you get any agreement in writing before sending in the payment. Many hospitals and healthcare providers offer financial assistance programs to low- and moderate-income patients. These programs can reduce or even erase medical bills altogether, so they're typically worth pursuing if you have limited income and are trying to get rid of the medical debt on your credit report. Start by contacting your provider's billing department to ask about eligibility for charity care or hardship assistance. If they forgive the debt, you can request that the account be updated with the credit bureaus to reflect a zero balance or be deleted entirely. If medical bills are just one piece of a larger debt puzzle, a debt management plan through a credit counseling agency could help. These programs combine multiple debts into one monthly payment, often with reduced interest rates and fees. While debt management plans don't directly remove medical debt from your credit report, they can help you get current and avoid further credit damage. And, as you pay down balances over time, your credit profile should improve. Experian, Equifax and TransUnion announced in 2023 that they would remove medical collections under $500 from consumer credit reports. If you have a small medical debt under that $500 threshold that's still appearing, it could be there in error. File a dispute with the bureaus to have it deleted. The CFPB's rule was meant to offer sweeping relief from the credit damage of medical bills, and while a judge has blocked that relief, you still have options for dealing with unpaid medical debt. By disputing errors, negotiating settlements and tapping into available debt relief programs, you can take meaningful steps to get medical debt off your credit report and regain control of your finances in the process.
