Dan Weissmann
The federal Consumer Financial Protection Bureau has taken main steps to assist individuals with medical debt in its practically 14-year historical past. It issued guidelines barring medical debt from Americans’ credit score experiences and went after debt collectors who pressured prospects to pay bills they didn’t owe. But in early February, the Trump administration moved to successfully shutter the company.
“An Arm and a Leg” host Dan Weissmann talks with credit score counselor Lara Ceccarelli about how the CFPB has helped shoppers on the nonprofit the place she works, and the way she’s navigating the sudden change.
Consumer rights advocate Chi Chi Wu, an legal professional on the National Consumer Law Center, describes the court docket battle she and her colleagues are mounting to decelerate the company’s dismantling, and the place issues might go from right here.
Dan Weissmann
Host and producer of “An Arm and a Leg.” Previously, Dan was a employees reporter for Marketplace and Chicago’s WBEZ. His work additionally seems on All Things Considered, Marketplace, the BBC, 99 Percent Invisible, and Reveal, from the Center for Investigative Reporting.
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Transcript: Medical-Debt Watchdog Gets Sidelined by the New Administration
Note: “An Arm and a Leg” makes use of speech-recognition software program to generate transcripts, which can comprise errors. Please use the transcript as a software however examine the corresponding audio earlier than quoting the podcast.
Transcript: A medical-debt watchdog will get sidelined by the brand new administration
Dan: Hey there–
Lara Ceccarelli works for American Financial Solutions. That’s a non-profit credit score counseling company.
Lara spends her days speaking with individuals who have payments they’ll’t pay, debt collectors chasing them, together with for medical payments.
On a latest Sunday night time, Lara was winding down her day the way in which she often does.
Lara: I are inclined to learn the information earlier than mattress. I often discover that it provides me much less anxiousness, uh, when I’ve a transparent image of, you recognize, what’s occurring on this planet and I don’t really feel like I’m in the dead of night. And yeah, that Sunday was an exception.
Dan: That Sunday was February 9, and that night huge information had damaged concerning the Consumer Financial Protection Bureau– C F P B, for brief.
A federal company that’s principally a watchdog for shopper rights of every kind.
So, for years, each time Lara’s talked to a shopper, and it appears like a debt collector is violating their rights — which occurs so much– she has referred the shopper to the CFPB. And it has labored.
Lara: They’ve created these streamlined processes the place customers can submit complaints and see enforcement motion taken instantly.
Dan: But that Sunday night time, February 9, information broke that an official President Donald Trump had put in control of the CFPB was principally shutting the company down. Effective instantly.
Agency employees had gotten a memo telling them to — cease working.
Lara: I felt my abdomen sink via the ground. And my poor husband is lively obligation within the navy, so he was making ready for a really lengthy day the following day on his Navy ship, and he took one take a look at me and knew one thing was badly improper,
Dan: What did your husband say?
Lara: He tried to inform me that it was all going to be okay. I believe he was, uh, doing his finest to be as supportive as he might.
Dan: How late have been you up that night time?
Lara: Oh, I didn’t sleep. I believe I acquired perhaps one or two hours of sleep. I Lay down and I, uh, checked out my terrible popcorn ceiling and tried to sleep and simply couldn’t shut my mind off.
Dan: She was enthusiastic about how necessary the CFPB has been– what number of shoppers she’s referred to them.
I talked with Lara simply over per week after that Sunday night time. We’ll hear how she managed that first week, how she began shifting what she tells shoppers– what different sources she’s nonetheless referring them to.
And we’ll hear a few court docket case that has slowed down the Trump administration’s efforts to utterly dismantle the CFPB. And the place issues COULD go from right here.
But first, we should always discuss why the CFPB has been such a giant deal, particularly for individuals with medical money owed.
This is An Arm and a Leg, a present about why well being care prices so freaking a lot, and what we will perhaps do about it. I’m Dan Weissmann. I’m a reporter, and I like a problem. So the job we’ve chosen on this present is to take one of the vital enraging, terrifying, miserable components of American life–and produce you a present that’s entertaining, empowering and helpful.
We’re gonna hear about what the CFPB has accomplished about medical money owed from any individual who’s been engaged on this difficulty for the reason that starting.
Chi Chi Wu: My title is Chi Chi Wu. I’m a senior legal professional on the National Consumer Law Center.
Dan: Actually, she’s been at this since earlier than the start. Chi Chi Wu joined the National Consumer Law Center in 2001.
The Consumer Financial Protection Bureau began out a half dozen years later, in 2007– as an concept. A proposal from a regulation professor named Elizabeth Warren. She thought monetary establishments wanted a watchdog– or as she referred to as it, “a cop on the beat.”
In 2008, monetary establishments crashed the economic system. Barack Obama turned president. In 2010 Congress handed a regulation to place some new restrictions on monetary establishments– the “Dodd Frank Wall Street Reform and Consumer Protection Act”– which mandated the CFPB’s creation.
Chi Chi Wu says it didn’t take lengthy for medical money owed to land within the company’s cross-hairs..
Chi Chi Wu: In 2014, the Consumer Financial Protection Bureau did a examine that discovered, when you take a look at the debt assortment gadgets on credit score experiences…
Dan: In different phrases,when you ask: When individuals get put in collections, what are the payments really for?
Chi Chi Wu: …over half of them are for medical debt. Half. It was an enormous quantity.
Dan: In different phrases, a ton of individuals had awful credit score scores, not as a result of they’d taken a cruise they couldn’t pay for. But as a result of they’d gotten sick.
Chi Chi Wu: It was an enormous drawback. People would attempt to be shopping for a home or a automotive attempting to get a bank card and so they’d should pay extra and even get turned down .
Dan: And now it was on the file, because of the CFPB.
The subsequent yr a bunch of state attorneys common reached a “voluntary agreement” with the massive three credit score bureaus — Equifax, Experian, TransUnion. The huge three agreed that, they’d wait 180 days — six months — earlier than placing a medical debt on any individual’s credit score report.
Chi Chi Wu: So the thought was the patron would have six months to straighten out the debt with insurance coverage, work out what they really owed, perhaps dispute it in the event that they didn’t suppose they owed it.
Dan: Meanwhile, the CFPB was engaged on one other drawback.
Chi Chi Wu: Sometimes individuals would have gadgets on their credit score experiences, particularly for small greenback quantities that they by no means knew about till they went to purchase a automotive or refinance their home.
Dan: This was referred to as “parking,” and Chi Chi Wu says it was particularly frequent with medical money owed.
Chi Chi Wu: A debt collector would get a medical debt referred from a healthcare supplier and so they wouldn’t do something with it.
They wouldn’t ship a single letter. They wouldn’t make a single cellphone name. All they’d do is report that debt to the credit score bureaus and wait… would simply wait till the patron had to make use of their credit score rating for one thing, you recognize, refinance their mortgage, purchase a automotive…
Dan: Rent an condo. Apply for a job…
Chi Chi Wu: Yes, sure, all of these. And then, their credit score would get pulled, this medical debt would present up. And they’d be left scrambling as a result of they must clear that debt from their credit score report earlier than they may get that mortgage or automotive mortgage or job or condo, and even when they have been like, ‘I paid that, or insurance should have paid that,’ they didn’t have time to take care of it. Because when you’re in the midst of this huge necessary transaction, you don’t have time to attend 30 days for a credit score reporting dispute to be resolved. And typically it takes longer.
Dan: So, individuals paid up. They didn’t have a selection.
Chi Chi Wu: And the rationale debt collectors do that’s as a result of it’s low-cost. It’s low-cost to do credit score reporting. It’s costly to ship a letter as a result of it prices you, what’s the worth of a stamp proper now?
Dan: 73 cents! Plus no matter it prices you to print it out and stuff. A man who was once a debt collector as soon as instructed me sending a invoice prices two bucks.
Chi Chi Wu says the CFPB began engaged on a rule banning “parking” throughout the second Obama administration. And finalized the rule in 2020, below Donald Trump. It takes some time.
When Joe Biden turned President, he appointed a CFPB director who put further concentrate on medical money owed. The credit score bureaus acquired the concept that they may be topic to some new guidelines on that matter, and volunteered to make some modifications of their very own.
In May 2022 they introduced: Instead of ready simply six months to place medical payments on credit score experiences, they have been gonna wait a full yr.
Chi Chi Wu: Because six months typically just isn’t sufficient to take care of an insurance coverage dispute, proper? I imply, typically it takes so much longer. So they prolonged that to a yr after which they agreed to not report medical money owed below 500.
Dan: And that’s once I first talked with Lara Cecarelli for this present.
I used to be attempting to determine: Was it actually a giant deal? The money owed would nonetheless be on the books — collectors might nonetheless bug individuals about them. And tons of money owed would keep on credit score experiences.
Lara instructed me: YEP. That’s gonna be a giant deal.
When we talked this month, she instructed me she might see the impression of the CFPB in her work each day.
Lara: We’ve seen an enormous lower within the variety of complaints from customers, or issue that buyers are having with medical debt. It’s nonetheless one thing that we see. But you recognize, I used to have no less than one dialog about medical debt a day, often extra, and that’s not the case. You know, I’m having a few conversations per week, perhaps, about medical debt. So we’ve seen the impression.
Dan: And she might see extra on the horizon:
In January, earlier than the inauguration, the CFPB really issued new guidelines about medical debt. Like we mentioned, credit score bureaus had already promised to take away every thing beneath 5 hundred {dollars}.
Now, below the brand new guidelines, all medical money owed would come off. And lenders couldn’t take a look at medical money owed after they made lending choices.
The CFPB had deliberate to start out imposing these guidelines in March.
Now– on that Sunday night in February– Lara was seeing information: The complete company was shutting down. Over the following few days, information shops reported greater than 100 and fifty instant layoffs — and the cancellation of greater than $100 million in contracts. And rumors of a lot deeper cuts to come back.
Lara began doing this job throughout the first Tump administration. She says, this sweeping change is not only a swing of the pendulum again to how issues have been then.
Lara: No, that is new territory. They have been nonetheless sturdy, they have been nonetheless conscious of shopper complaints. The enforcement and the safety was nonetheless there,
Dan: For proper now, it’s gone. Coming up: What the primary CFPB-free week was like for Lara and her colleagues. What she’s telling shoppers now. And what Chi Chi Wu and her colleagues are doing.
An Arm and a Leg is a co-production of Public Road Productions and KFF Health News — that’s a nonprofit newsroom protecting well being points in America. KFF’s reporters do superb work. We’re honored to work with them.
Lara Ceccarelli says she’s needed to revise what she’s used to telling shoppers. Because referring individuals to the CFPB was a reasonably common a part of herday to day works.
Lara: It makes a distinction feeling such as you’ve acquired a powerhouse at your again. You say, you recognize, the CFPB is extremely stable, they may assist help you. You know, all it’s important to do is attain out. They’re communicative, and they’re sturdy, and I can’t say that anymore.
Dan: There’s nonetheless an internet site. There’s nonetheless a cellphone quantity.
Lara: But you’re not getting an individual proper now. You’re getting voicemails. So at this level, we’re nonetheless advising shoppers that the CFPB is, you recognize, an necessary company But we’re additionally informing them that proper now the CFPB is principally going darkish,
Dan: So, she’s telling individuals: Hey, it’s price calling the CFPB, simply in case any individual picks up. But in the meantime listed here are another locations to name.
Lara: I had a shopper who had been threatened by a debt collector, and the debt that they’re amassing on is definitely outdoors of the statute of limitations. It’s not collectible anymore. But they’re being harassed principally, you recognize, calling them in any respect hours of the day and night time and advising them that, you recognize, they’re nonetheless topic to authorized motion, none of which is true.
Dan: Which means, Lara tells me, that collector is breaking a regulation referred to as the Fair Debt Collection Practices Act.
Lara: And usually I’d have despatched that shopper within the course of the CFPB.
Dan: Normally, you file a criticism with the CFPB, the corporate responds to you inside 15 days, based on the company’s web site.
Lara says corporations concentrate– as a result of the CFPB has a giant stick. In 2023, the company shut down one medical-debt assortment firm for violating this very regulation.
That model of regular is gone for now. But Lara occurs to know, the Federal Trade Commission — which remains to be up and working– additionally has authority to implement that regulation. They’re not specialists, however they’ve acquired somebody to reply the telephones. So she inspired her shopper to attempt them.
Other people, she’s referring to their state legal professional common’s workplace. In quite a lot of states, consumer-protection is a giant a part of the state AG’s job. Some state’s have impartial shopper safety bureaus.
Lara and her colleagues respect the work they do.
But it’s not the identical as having a strong, nationwide company that enforces federal regulation.
Lara: You know, it wasn’t one thing the place any individual in Ohio has a special algorithm from any individual in California so far as the place you go and who you contacted. Centralized enforcement and made it very easy for everyone to know the place to go to get assist with their specific difficulty. All these different completely different locations, can kind of take up a chunk of the enforcement motion , however none of them have that very same sturdy energy that the CFPB had, or the direct focus particularly on monetary establishments and and their interactions with customers immediately.
Dan: Lara and her colleagues are nonetheless there. She says their funding comes from non-public organizations, not the feds.
Lara: We’re not fearful concerning the lights going out right here but
We all tried to carry one another up and, you recognize, discuss concerning the different sources that now we have accessible, all of that are helpful. and now we have to, you recognize, keep some extent of equilibrium, while you’re chatting with shoppers that, you recognize, one among you can have a breakdown at a time, proper?
And that’s by no means our flip. So, um, you recognize, it’s important to keep some extent of optimism and positivity, as a result of when you’re not optimistic and constructive, for his or her outcomes. How can they presumably suppose there’s hope for the long run?
Dan: Lara says she’s doing her finest at work– and dealing on maintaining her stability.
Lara: I’ve acquired a gorgeous little paint mare that I journey um, and I get to exit and play along with her each time the, uh, information will get too bleak. Normally, she will get, uh, one or two days with out, you recognize, having to place up with me, however proper now the necessity is dire.
Dan: Meanwhile, Chi Chi Wu is combating. On two fronts.
I discussed earlier: Biden’s CFPB took a giant parting shot in early January. The company finalized a rule banning medical money owed from credit score experiences.
That rule acquired hit instantly with lawsuits from ACA International — that’s the trade affiliation for debt collectors — and the credit score bureaus.
Chi Chi Wu and her colleagues on the National Consumer Law Center figured: The Trump Administration won’t defend these lawsuits.
So they began making ready motions to intervene: principally asking the court docket’s permission to take over the protection. On the Sunday night when Lara Ceccarelli learn concerning the CFPB shutdown on the information, Chi Chi Wu was not watching the information.
Chi Chi Wu: I had been working like a mad lady that weekend
Dan: Drafting paperwork for that movement to intervene.
Chi Chi Wu: So I used to be form of busy all weekend, writing, not watching the Super Bowl
Dan: She acquired phrase from colleagues that Trump’s individuals had shut down the CFPB, and she or he was like, “OK. That going into this document I’m writing..”
Chi Chi Wu: …Because that was extra help saying, properly, the, this new CFPB just isn’t going to defend this rule and so it is best to allow us to defend the rule.
Dan: Let us — the NCLC — defend the rule in court docket.
So OK, that was materials for her struggle on one entrance. But after all it opens up one other entrance, one other authorized battle.
In this one, NCLC is definitely a plaintiff — together with a union representing CFPB workers, and a pair different non earnings. On February 13– 4 days after the CFPB went darkish — they requested a federal decide, principally to cease the CFPB shutdown.
The subsequent day, the decide issued a short lived order, telling the CFPB to carry off on three issues:
One. No extra mass firings.
Two: Don’t destroy information — or take information down from public web sites.
And three: Don’t return cash to congress.
That order lasts simply over two weeks, then there’s a listening to scheduled. That’s occurring just a few days after we publish this episode, and we’ll be watching. .
The different lawsuit, concerning the CFPB’s rule on medical debt– it’s on a slower timetable.
Meanwhile, Chi Chi Wu says there are different fronts to struggle on, and never only for her.
Chi Chi Wu: This is the place states can step in and defend the customers of their state. Nine states have already banned medical debt from credit score experiences. New York, Colorado, California, Rhode Island, even Virginia — a purple state. And so, in case your listeners are questioning what can they do — I imply, you recognize, clearly contact their members of Congress to help the CFPB — but additionally, you recognize, if they’re in a state that doesn’t have one among these legal guidelines, they’ll attempt to get their state legislatures to move a regulation to guard them from medical money owed on credit score experiences.
Dan: We are gonna do our greatest to remain on high of this story.Just a few days after we publish this episode, there’ll be that listening to in federal court docket on the lawsuit opposing the CFPB’s shutdown.
I’ll submit updates on the social networking website BlueSky — it’s form of a Twitter substitute, and you could find me there at danweissmann (spelled with two esses and two enns)
Next week’s First Aid Kit e-newsletter will embrace a roundup of what we all know, and what sources are accessible. If you’re not signed up for First Aid Kit but, simply head to arm and a leg present, dot com, slash, first support package.
And we’ll be again in just a few weeks, with an episode about one listener’s struggle — profitable struggle — towards a six thousand greenback cost.
Megan: I didn’t should be an skilled on this. I simply wanted to have entry to the instruments and the podcast would remind me of them. So I used to be like, okay, I’m so assured that I don’t owe this and so that might get me, like, actually amped up and offended about it.
Till then, care for your self.
This episode of An Arm and a Leg was produced by me, Dan Weissmann, with
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