The CFPB’s Increased Focus on Medical Financing Products

Over the course of the last year, the Consumer Financial Protection Bureau (CFPB or Bureau) has increased its scrutiny of medical financing products, such as medical credit cards and installment loans. In July 2023, the CFPB and other federal agencies launched an inquiry into medical payment products, discussed here. Last week, when the CFPB announced its proposed rule to ban the reporting of medical debt on consumer reports, discussed here, it stated it was considering action related to medical financing products. Then this week, the CFPB published a blog examining how financial institutions market their products to healthcare providers in an effort to ensure “consumers aren’t pushed into medical payment products.” The CFPB’s ongoing discourse on this topic signals a potential regulatory crackdown may be coming.

Highlights from the CFPB’s blog include:

• Aggressive Marketing Practices: The CFPB states that it has received reports of medical payment products being aggressively marketed to consumers, often those who are financially vulnerable or eligible for financial assistance. The Bureau is particularly concerned about the tactics used to “push” these products onto consumers.
• Incentives for Healthcare Providers: The CFPB alleges that financial institutions are incentivizing healthcare providers to enroll patients in financing products. The CFPB is concerned about potential conflicts of interest and the ethical implications of such incentives (e.g., pushing interest-bearing products on consumers who cannot afford them or who may be eligible for other benefits or lower cost alternatives).
• High-Interest Rates and Deferred Interest: The CFPB’s research indicates that medical payment products often carry interest rates exceeding 25%. Additionally, the “deferred interest” feature of medical credit cards is, according to the CFPB, frequently misunderstood by consumers who are unaware that they can be charged interest retroactively for the entire period if they do not pay off their full balance before the end of the promotional period. This is a concern that the Bureau has been expressing, on and off, for over 10 years now.

According to the blog, the CFPB will be monitoring the incentives, marketing materials, and oversight financial institutions are providing to healthcare providers. The Bureau is also collaborating with the U.S. Departments of Health and Human Services and Treasury to address these issues. The CFPB’s persistent focus on medical financing products suggests that regulatory action may be imminent. Industry participants should be prepared for potential new regulations and increased oversight and should examine their practices to determine if they are subject to the criticisms outlined by the Bureau in this recent blog post.