On January 8, a complaint was filed in the U.S. District Court for the Southern District of Texas challenging the CFPB’s newly finalized medical debt rule that restricts credit reporting agencies from including medical debt information on consumer credit reports (covered by InfoBytes here). The plaintiffs, a trade association and a collection services company, argue that this rule will obscure over $49 billion in medical debts, adversely affect healthcare providers’ ability to collect payments, and undermine creditors ability to assess creditworthiness. The plaintiffs contend that the CFPB lacks the statutory authority to implement the rule because “[u]nder both the FCRA’s plain text and the major questions doctrine the Bureau has exceeded its lawfully delegated power.” Plaintiffs also contend that the final rule violates the First Amendment because it “is not narrowly tailored, content-based, and prevents the communication of accurate information without a legitimate state interest.” They also argue that the rule is based on political ideology rather than “reasoned decision-making.” Furthermore, the plaintiffs claim that the CFPB is funded unconstitutionally under the recent Supreme Court Decision, CFPB v. Fin. Servs. Ass’n of Am., Lted, 601 U.S. 416 (2024) because, under that decision, the CFPB can only be funded by the combined earnings of the Federal Reserve, and the Federal Reserve has had no earnings since September 2022.

Plaintiffs request the court to enjoin the enactment and enforcement of the Final Rule in its entirety.