In less than a week of announcing its final rule updating Regulation V of the Fair Credit Reporting Act (FCRA), the Consumer Financial Protection Bureau (CFPB) has found itself on the defense side of two Lawsuits. It’s the ACA lawsuit against the CFPB’s Regulation V.
In the ACA lawsuit against the CFPB, ACA International and co-plaintiff Specialized Collection Systems Inc. (SCS) have filed a lawsuit in Texas against the CFPB. Previously, the CFPB was hit with a lawsuit filed by the Consumer Data Industry Association (CDIA) and Cornerstone Credit Union League, challenging the rule. Both of these lawsuits
In the ACA lawsuit against the CFPB, ACA and SCS state, “Americans are frustrated by medical bills. The system is confusing and expensive. But frustration does not justify lawlessness. Here, a federal agency without authority over health care is exploiting this frustration by forcing the suppression of accurate information when enacting a regulation to prevent credit reporting agencies from acknowledging medical debts on credit reports,” the lawsuit, filed in the U.S. District Court for the Southern District of Texas, Houston Division, states. “No agency has the power to do that.”
The ACA lawsuit against the CFPB makes the argument that the final rule must be prevented from taking effect for several important legal reasons:
- The CFPB does not have the statutory authority to issue the Final Rule. Under both the FCRA’s plain text and the major questions doctrine the Bureau has exceeded its lawfully delegated power.
- Because the Rule is not narrowly tailored, content-based, and prevents the communication of accurate information without a legitimate state interest, it violates the First Amendment.
- The Final Rule is not based on reasoned decision-making, but rather political ideology. Defendants ignored many better and more recent studies that showed the importance of medical debt information for creditors to make safe loans—including from FICO and CRAs. Simultaneously, the CFPB disregarded comments about the Rule’s financial and social costs from a wide variety of stakeholders ranging from lenders to healthcare providers, in addition to the collections industry.
- Finally, the CFPB is operating unconstitutionally because for several years, the Federal Reserve has not had “earnings” with which it is allowed to fund CFPB activities.
These lawsuits continue to highlight the unreasonable and harmful impacts of the CFPB’s final rule, which is also outside the scope of the bureau’s reach. Americollect will continue to keep you up to date with any changes and fight for your right to recover the hard-earned revenue that is needed to provide the compassionate care you provide every day.
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