CFPB Advisory Opinion Challenges Begin to Mount

Key points:

1. There are an increasing number of groups challenging the legality of the CFPB medical bad debt collection advisory opinion.
2. The ACA has filed a lawsuit against the CFPB, calling the advisory opinion “politically motivated.”
3. Legislation has been introduced that disapproves the advisory opinion.

The CFPB advisory opinion challenges have kicked off. When the CFPB released an Advisory Opinion on medical debt collection in early October, it caused an uproar among medical bad debt collectors and hospitals alike because it ultimately creates new rules that conflict with the Fair Debt Collection Practices Act (FDCPA) and Regulation F requirements when working to collect medical bills. It also duplicates the rules the CFPB has already proposed on medical debt prohibitions.

Currently there are two entities that are contesting this advisory opinion. ACA International filed a lawsuit challenging the advisory opinion and a member of the house has issued a resolution opposing the advisory opinion that has been referred to the House Financial Services Committee.

ACA Lawsuit: The First CFPB Advisory Opinion Challenge

A lawsuit filed by ACA International (ACA) is the first occurrence of the CFPB advisory opinion challenges. ACA and ACA member Collection Bureau Services filed a lawsuit in the U.S. District Court for the District of Columbia to halt the advisory opinion, calling it “politically motivated.” The lawsuit claims that the bureau failed to follow the Administrative Procedures Act (APA), rewrote the FDCPA, which it does not have authority to do, and created conflicts with existing law.

Shortly after the CFPB released the advisory opinion, it was published on the Federal Register and set an effective date of December 3, 2024, for regulated entities without any input from the affected entities, another overstep by the CFPB beyond its required regulatory processes.

The lawsuit from ACA and legal partner Brownstein Hyatt Farber Schreck LLP seeks:

• A declaration that the CFPB’s advisory opinion is arbitrary, capricious, or otherwise contrary to law within the meaning of the APA.
• A declaration that the CFPB’s advisory opinion is in excess of statutory jurisdiction, authority, or limitations, or short of statutory right within the meaning of the APA.
• A declaration that the CFPB’s advisory opinion is without observance of procedure required by law within the meaning of the APA.
• A declaration that the CFPB’s advisory opinion is unconstitutional because it was funded in violation of the Appropriations Clause.
• Several other additional remedies as outlined in the complaint.

House Resolution 220

In mid-November, U.S. Rep. Gary Palmer introduced a resolution for Congress to review and disapprove the CFPB’s advisory opinion concerning medical debt that was introduced in October. House Resolution 220 has been referred to the House Financial Services Committee for consideration.

The resolution states:

“Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Bureau of Consumer Financial Protection relating to ‘Debt Collection Practices (Regulation F); Deceptive and Unfair Collection of Medical Debt.’

– Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to ‘Debt Collection Practices (Regulation F); Deceptive and Unfair Collection of Medical Debt’ (89 Fed. Reg. 80715; published Oct. 4, 2024), and such rule shall have no force or effect.”

While this resolution is currently in the House Financial Services Committee, it is a positive step towards correcting the CFPB overreach.

CFPB Advisory Opinion Challenges Conclusion

The CFPB advisory opinion is poised to drastically impact bad debt medical collections, but there are groups working to stop it. The CFPB advisory opinion challenges have just begun, and they are having an impact. In late November, the December 3^rd effective date was pushed back until January 2, 2025.  Americollect will keep you appraised of any changes that happen going forward.