New Developments on Collection and Reporting of Consumer Medical Debt After CFPB Issues FCRA Interpretative Rule

ABSTRACT: The Consumer Financial Protection Bureau (“CFPB”) issued a new interpretative rule regarding the Fair Credit Reporting Act (“FCRA”) clarifying that the Act generally preempts State laws on a number of areas of credit reporting.

On October 28, 2025, the Consumer Financial Protection Bureau (“CFPB”) issued an interpretive rule, 12 CFR Part 1022, regarding the Fair Credit Reporting Act (“FCRA”); the new interpretive rule finds that the FCRA generally preempts State laws that touch on broad areas of credit reporting, including medical debt reporting. Collection and Reporting related to consumer medical debt information has been a hot topic for the financial sector this year, see our prior blog posts discussing the issue here, here, here, here, and here.

The new interpretive rule replaces a rule issued by the CFPB under the Biden administration in 2022, which was rescinded by the CFPB along with nearly 70 other policy and regulatory guides issued over the last 15 years; we discussed this rescission activity and other CFPB updates back in May.

The Fair Credit Reporting Act

The FCRA, 15 U.S.C. § 1681 et seq. originally enacted in 1970, regulates the collection, dissemination, and use of consumer information, including consumer credit information.  Specifically, the FCRA regulates: (1) consumer reporting agencies (i.e. Equifax, Transunion, and Experian); (2) users of consumer reports; and (3) furnishers of consumer information.  The FCRA limits how information in a consumer credit report can be used by companies and who can use the information; it also requires notification to a consumer when their credit report is obtained and used by a company. 

The FCRA also creates a number of obligations for creditors in providing consumer information.  The creditor must: (1) provide complete and accurate information to the reporting agencies; (2) Investigate consumer disputes received from reporting agencies; (3) correct, delete or verify information, meeting certain time and investigatory obligations, when notified of a dispute; and (4) inform consumers about negative information placed on their credit report. 

The new interpretive rule looks at provision 1681t(b)(1), to find that Congress carefully crafted language intended to preempt several areas of State Law through enactment of and amendments to the FCRA. 

The 2022 Interpretive Rule that the Bureau Withdrew in May 2025

The prior interpretive rule found that sections 1681t(b)(1) and 1681t(b)(5) used preemption language that has a “narrow sweep,” allowing for substantial State regulation of consumer reports, consumer reporting agencies, and collection of consumer data.  The 2022 rule found that the FCRA’s preemption was limited to those topics specifically referenced in the FCRA, and that States were free to regulate collection and reporting on a number of topics including medical debt, rental information, and arrest records.

In May, the CFPB withdrew the 2022 interpretive rule explaining that the Bureau was “committed to issuing guidance only where that guidance is necessary and would reduce compliance burdens rather than increase them.”

The New Rule and the CFPB’s Reasoning

The new rule finds the FCRA was intended to broadly preempt State authorities from regulating the collection and reporting of consumer information.  The new rule focuses on the lead paragraph’s wording that “[n]o requirement or prohibition may be imposed under the laws of any State … with respect to any subject matter regulated under” various provisions of the FCRA. The new rule then identifies eleven subparagraphs of §1681 to find a broad intent to occupy the whole field of regulation related to consumer reporting. 

The CFPB asserts that Congress’s use of broad and categorical language shows its intent that the preemption clause applies expansively.  The “deliberately expansive” terms used in the FCRA can only be interpreted to find that Congress meant to displace State laws related to consumer reporting, according to the CFPB.

The CFPB also took that position that the case law relied upon, Dan’s City Used Cars, Inc. v. Pelkey 569 U.S. 251 (2013), in issuing the 2022 guidance did not support the conclusion that the preemption language of the FCRA should be construed narrowly.  The CFPB also discussed court decisions where the court decisions where the Second and Tenth Circuits rejected the narrow preemption finding of the 2022 guidance.

The new rule will stabilize the consumer-reporting market and remove the undermining impact of the 2022 rule, according to the CFPB.  Similarly, the CFPB asserts the new rule will effectuate Congress’s intent to create national credit markets and a national credit-reporting system.

Consumer Reporting Agencies Beware

Consumer Reporting Agencies should not just adopt a policy of ignoring State regulations related to collection and reporting of consumer financial information. The arguments asserted by the CFPB favoring complete preemption echo those that have already been rejected in recent years by the First and Ninth circuits upholding state medical debt reporting laws. The U.S. Supreme Court also recently issued the Loper Bright decision rolling back the doctrine of judicial deference to the agencies’ legal interpretations. Additionally, the new rule is self-contradictory in that it asserts that the CFPB should not opine on preemption issues.

Baker Sterchi’s Financial Services Practice Group is here to help you with any questions or concerns that may arise as a result of the new rule.