Daily Digest - March 5, 2025

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CRAs File New MTD in Suit Over $500 Medical Debt Reporting Threshold

The three major credit reporting agencies have filed a new motion to dismiss a class-action lawsuit against them accusing them of conspiring together when they announced a decision not to include medical debts under $500 on consumers' credit reports.

The lawsuit, brought by Dr. Derrick Adams, Cape Emergency Physicians, and AmeriFinancial Solutions, LLC, challenges the recent changes made by Experian, Equifax, and TransUnion to exclude certain medical debts from consumer credit reports. The plaintiffs claim that this decision, which removes medical debts under $500 or those less than one year overdue, harms medical providers and debt collectors by reducing patients' motivation to pay their outstanding bills. However, the credit reporting agencies are pushing for the case to be dismissed, arguing that the plaintiffs fail to present a valid legal claim.

In their motion to dismiss, the defendants argue that the plaintiffs have not sufficiently demonstrated that their injuries are connected to the CRAs’ actions. They assert that the plaintiffs’ alleged harm, which includes a “devaluation injury” from fewer payments made by patients, is too indirect and speculative to justify an antitrust claim. According to the defendants, the plaintiffs’ injury is not a result of the CRAs' decision to remove certain medical debts from credit reports, but rather stems from the independent actions of patients who may choose not to pay their medical bills due to the reporting changes.

The credit reporting agencies emphasize that the plaintiffs, particularly the debt collectors, do not have standing to bring the lawsuit because they do not directly purchase credit reports from the CRAs. The defendants argue that only parties who directly transact with the CRAs—such as creditors and lenders—would have standing to claim injury resulting from the exclusion of medical debts. The defendants also point out that the plaintiffs’ theory of injury is speculative, relying on the assumption that the removal of debts under $500 from credit reports will cause patients to delay or avoid payments. The CRAs assert that no factual evidence has been provided to support this theory, especially when they have made the change in response to consumer protection concerns and in line with regulatory guidance from the Consumer Financial Protection Bureau.

Furthermore, the motion to dismiss underscores that the plaintiffs have failed to show that their injury is tied to any unlawful conduct. The defendants argue that removing medical debts under $500 from credit reports is not anti-competitive but a response to increasing consumer pressure and regulatory oversight. The CFPB has repeatedly criticized the inclusion of medical debt in credit reports, stating that it is less predictive of future payment problems than other forms of debt.

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Consumers Borrowed $74B to Pay for Healthcare in 2024: Survey

• More than 30 million people took on $74 billion of debt to pay for healthcare last year, according to the results of a nationwide survey released yesterday. The findings reveal striking differences by age, gender, and race, suggesting that younger adults and minority communities bear a disproportionate share of the burden.

  By the numbers

  • Borrowing prevalence: Twelve percent of respondents reported borrowing money for healthcare expenses. Among those aged 18-29, that rate jumped to 18%. By contrast, only 9% of adults aged 50-64 and 2% of those 65 and older needed loans for medical bills.

  • Gender gap: Women under 50 were more likely than men to borrow (20% vs. 14%). Women aged 50-64 were also twice as likely as men in that age range to take on medical debt.

  • Racial and ethnic disparities: Black (23%) and Hispanic (16%) adults reported borrowing at higher rates than White adults (9%), with particularly wide gaps for those younger than 50.

  • Household responsibilities: Adults with children under 18 in the home were twice as likely to borrow (19%) as those without kids (8%).

  More details

  • Amount borrowed: Nearly six in 10 who borrowed needed at least $500, while 38% borrowed less than $500. Adults 50 and older who took on debt tended to require larger sums — about half needed $3,000 or more. Younger adults typically borrowed less, with a median of $300 for those aged 18-29.

  • Lingering fears: Beyond those who actually borrowed, 58% of all survey respondents remain concerned they would rack up medical debt if faced with a major health issue. Nearly half of adults 65 and older share that worry, indicating that even Medicare recipients don’t feel fully protected.

Judge Rules FCRA Investigation Reasonable, Grants Defendant’s MSJ

A District Court judge in Indiana has granted a defendant's motion for summary judgment that its investigation into direct and indirect disputes filed by the plaintiff were reasonable under the Fair Credit Reporting Act while also denying a motion for summary judgment from the plaintiff on claims the defendant violated the Fair Debt Collection Practices Act.

The background: The plaintiff allegedly signed a housing agreement for an apartment while attending university. The plaintiff allegedly failed to make the required prepayment and was also unable to secure a suitable guarantor.

• As a result, the plaintiff did not move into the apartment, and the owner of the apartment placed the debt with the defendant for collection. The defendant reported the plaintiff’s alleged debt to the credit reporting agencies.

• The plaintiff first disputed the debt through in April 2020, and the defendant confirmed the balance owed. 

• Several months later, the plaintiff sent a direct dispute letter to the defendant claiming that she had never lived in the apartment and had not signed the required guaranty or made the necessary prepayment. After receiving this letter, the defendant reached out to the apartment owner to confirm the debt, and it affirmed that the plaintiff was responsible for the amount owed under the housing agreement. The defendant subsequently mailed the plaintiff documentation, stating that the investigation had been completed and the debt was valid.

• The plaintiff continued to dispute the debt, ultimately leading to a lawsuit she filed in Indiana state court, seeking a declaratory judgment against the apartment owner. The court ruled in the plaintiff’s favor, declaring that she was not liable for the debt. Following the court ruling, the plaintiff sent further disputes to the CRAs, attaching evidence of the state court’s judgment.

• Despite the court’s judgment and the plaintiff’s continued disputes, the defendant continued reporting the debt. The plaintiff claims that the defendant violated the FCRA and the FDCPA by failing to properly investigate her disputes and continuing to report inaccurate information.

The ruling: In her ruling, Judge Theresa L. Springmann of the District Court for the Northern District of Indiana determined that the defendant's investigation into the disputed debt was reasonable, and it met the FCRA’s requirements for conducting a proper investigation. The FCRA requires that a data furnisher, like the defendant, conduct a reasonable investigation when it receives notice of a dispute regarding the completeness or accuracy of any information provided to the CRAs. The judge determined that it followed its procedures for investigating disputes, which included contacting the original creditor to confirm the debt’s validity. Thus, the court concluded that NCS’s investigation was not unreasonable as a matter of law.

• Judge Springmann also ruled that the plaintiff had not sufficiently demonstrated that the defendant's actions violated the FDCPA, specifically with regard to the alleged false representations and communication with the CRAs. While the plaintiff had provided evidence of continued reporting and settlement offers, the court determined that these actions did not constitute violations under the FDCPA.

• More details here.

23 Companies Seeking Collection Talent

• Check out a wide variety of entry-level, mid-level, and senior positions that companies in the credit and collection industry are looking to fill across a variety of departments. Or, do some important research to help refine your future job posts.

• More details here.

WORTH NOTING: Are there questions that ChatGPT and other Large Language Models shouldn’t be asked to answer? … Takeaways from last night’s address by President Trump to Congress and some factchecking of the speech … Is spite the reason that many people choose to believe conspiracy theories? … The price of going to a concert is soaring and many are going into debt to see their favorite artists … Three phrases you should never say during a negotiation … How home prices are going to be impacted by President Trump’s new tariffs … Here are nine different charts to break down the state of the economy.

Wisdom Wednesday, part I

Wisdom Wednesday, Part II

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