Banking and Finance Law Daily Wrap Up, EXPERT INSIGHTS—CFPB issues rule that FCRA preempts state measures barring medical debt, (Nov 13, 2025)
Law Firms Mentioned:Goodwin Procter LLP
Organizations Mentioned:Consumer Financial Protection Bureau | Equifax | Experian Corp. | Goodwin Procter, LLP | TransUnion Corp.
By Zachary Weinstein of Goodwin Procter LLP
The Biden administration issued rules aimed at encouraging states to adopt stronger medical debt protections. The CFPB under the Trump administration has taken the position that those state laws are preempted by the FCRA.
The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule on October 20, 2025 stating that the Fair Credit Reporting Act (FCRA) preempts state measures barring medical debt in consumer credit reports. This reverses a Biden-era interpretation, issued in 2022 but withdrawn by the Trump administration in May 2025, which took the position that the FCRA's preemption language is "narrow and targeted," thereby allowing states to pass laws restricting medical debt reporting beyond what federal law provides.
The Biden administration was focused on medical debt, as Goodwin covered at the time, and issued by the CFPB was aimed at encouraging states to adopt stronger protections in multiple consumer financial services fields, including credit reporting. Sixteen states have passed medical debt reporting bans, and legislation is pending in two others.
But the CFPB under the Trump administration has now taken the position that those state laws are preempted by the FCRA and should be overturned by the courts. According to the CFPB's new interpretative rule, "[t]he FCRA does not compel—or even authorize—the Bureau to provide its legally binding views on preemption … Nor did the 2022 rule ease compliance burdens. To the contrary [], the 2022 rule sowed confusion into the credit reporting system by creating a patchwork quilt of federal and state laws competing to govern the marketplace." The CFPB further asserts that it was "unnecessary for the Bureau in 2022 to opine on the scope of preemption under the FCRA" because "courts are the ultimate arbiters of statutory meaning" and relies upon the Supreme Court's 2024 Loper Bright Enterprises v. Raimondo decision which upended Chevron deference to regulators' interpretation of unclear laws. But Loper Bright may undercut the persuasiveness of this latest CFPB rule, limiting its value when courts in the not-too-distant-future review expected challenges to state credit reporting laws.
The practical result of the new rule will be somewhat limited because the three biggest credit reporting companies—Equifax, Experian, and TransUnion—have already reduced medical debt on credit reports by ceasing to report medical debt under $500. But this new rule comes as health insurance premiums are expected to skyrocket during the current government shutdown. This may increase the number of Americans with medical debt over $500 that will be impacted by the new rule and will no longer be protected by state restrictions on reporting medical debt.
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Zachary Weinstein
Goodwin Procter LLP
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Attorneys: (Goodwin Procter LLP).
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