Banking and Finance Law Daily Wrap Up, FAIR CREDIT REPORTING—Credit Bureaus challenge Colorado law barring medical-debt entries on credit reports, (Nov 7, 2025)

By Shashi Kant, BALLB, LLM

The complaint alleges Colorado’s medical-debt reporting ban conflicts with federal credit reporting standards and raising constitutional free speech concerns.

ACA International and Fresno Credit Bureau, doing business as Creditors Bureau USA, have filed a complaint in the U.S. District Court for the District of Colorado challenging the constitutionality of Colorado’s new credit reporting statute, House Bill 23-1126. The law, which took effect Aug. 7, 2023, prohibits consumer reporting agencies from including medical debt information in consumer reports, with limited exceptions.

The plaintiffs allege that the Colorado statute is preempted by the federal Fair Credit Reporting Act (FCRA) and violates the First Amendment by imposing content-based restrictions on truthful commercial speech. ACA and Creditors Bureau USA seek declaratory and injunctive relief against the state’s Administrator of the Uniform Consumer Credit Code, Martha Fulford, in her official capacity.

Preemption and constitutional claims. According to the complaint, the FCRA establishes comprehensive national standards for the collection, use, and dissemination of consumer credit information. The plaintiffs argue that Colorado’s prohibition on the reporting of medical debt conflicts directly with the FCRA’s provisions allowing for the inclusion of such information, provided that it is coded to protect consumer privacy. The credit bureaus cite 15 U.S.C. §§ 1681b(g)(1)–(2) and 1681c(a)(6), which expressly authorize consumer reporting agencies to furnish and creditors to use coded medical debt data.

The plaintiffs assert that by suppressing accurate, federally authorized information and blocking the only lawful channel for conveying medical debt obligations, HB 23-1126 frustrates the FCRA’s objectives of accuracy, fairness, and uniformity. They further contend that the state’s ban constitutes a content- and purpose-based restraint on truthful speech, since it allows positive or non-adverse information about medical debts to appear on credit reports while prohibiting adverse data. The complaint alleges that this differential treatment violates the First Amendment’s protection of both the right to speak and the right to receive information.

Impact on industry and consumers. ACA’s lawsuit describes the Colorado law as harmful to creditors, health-care providers, and consumers alike. The filing asserts that by concealing over $1 billion in unpaid medical obligations owed to Colorado medical professionals and institutions, the law creates opacity in credit markets. ACA argues that lenders must assume higher undisclosed debt levels for all Colorado borrowers, potentially raising borrowing costs across the state. The trade group’s complaint cites data from the Consumer Financial Protection Bureau indicating that consumers’ credit scores typically increase by an average of 25 points within a month after medical debts are suppressed. ACA asserts that these increases occur without any change in the underlying obligation, misleading creditors and distorting risk assessments.

In a press release accompanying the filing, ACA Chief Executive Officer Scott Purcell said the lawsuit aims to “protect the ability of medical providers to operate effectively and deliver quality care” while maintaining “a fair, transparent credit ecosystem that keeps borrowing costs low for all Colorado consumers”.

Legislative background. House Bill 23-1126 was enacted by the Colorado General Assembly in June 2023. The statute amended several provisions of the Colorado Consumer Credit Code to prohibit credit bureaus from including medical debt in consumer reports, bar debt collectors from representing that medical debt will be included in credit reports and require collectors to disclose in initial communications that Colorado law forbids such reporting. The law defines “medical debt” as obligations arising from health-care services or goods, including prescription drugs and durable medical equipment, but excludes general-purpose credit card debt unless the card is designated solely for medical expenses. Reporting is permitted only in limited circumstances, such as when used in connection with high-value mortgage transactions exceeding the Federal Housing Finance Agency’s conforming loan limit.

CFPB interpretive rule. The ACA lawsuit follows a recent interpretive rule issued by the CFPB clarifying that the FCRA “generally preempts State laws that touch on broad areas of credit reporting” to preserve national standards for the credit reporting system (see Banking and Finance Law Daily, Oct. 27, 2025). The interpretive rule replaces and withdraws a 2022 guidance that had allowed greater latitude for state-level regulation. In its new statement, the Bureau emphasized that Congress “plainly meant to sweep away most State regulation in the area” of credit reporting and that allowing each state to set distinct rules “would undermine the unified national credit market.” ACA’s complaint references this CFPB rule, asserting that it confirms the federal preemption of state laws like Colorado’s.

Attorneys: Sarah J. Auchterlonie (Brownstein Hyatt Farber Schreck LLP) for ACA International and Fresno Credit Bureau d/b/a Creditors Bureau USA.

Companies: ACA International; Fresno Credit Bureau d/b/a Creditors Bureau USA

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