WASHINGTON — Four days after announcing an inquiry into
Much of the hearing, which included comments from panelists and members of the public, focused on credit cards that charge deferred interest. That practice — which entails customers paying interest retroactively at the end of a 0% promotional period if the balance is not fully paid when that period expires — is a longtime target of consumer advocates.
Chi Chi Wu, senior attorney at the National Consumer Law Center, said that deferred interest can lead consumers to accrue massive levels of medical debt, and she argued that the practice should be banned.
She said that deferred interest violates the original intent of the Credit Card Accountability Responsibility and Disclosure Act of 2009, which explicitly prohibits retroactive rate increases and double-cycle billing. When the Federal Reserve wrote the law's
"What the Fed did was it allowed deferred interest, creating a regulatory loophole for it," she said. "So the CFPB could eliminate that loophole or restrict it significantly."
CFPB Director Rohit Chopra also voiced concern about deferred interest, as well as about hidden fees that inflate loan amounts and the high interest rates that accompany some medical credit instruments.
Chopra said that strengthening consumer protections can — in addition to protecting consumers — mitigate the negative impact that medical debt has on the U.S. health care system as a whole.
The financial burden of medical bills deters individuals and families from seeking necessary care, according to Chopra. He argued that predatory billing practices exacerbate the costs imposed by the problem of delaying care.
Chopra also expressed concerns about the prevalence of errors in medical billing and insurance, predatory pricing, lack of transparency in medical payment products and the negative impact that such practices can have on patients' ability to seek financial assistance.
"In some cases, individuals have been under the impression they are signing consent for treatment, not for a financing product, and in others they're simply taking these products because they can't afford the care received. Not because it's an affordable means of payment," Chopra said.
He pointed to ways in which medical debt is different from other kinds of debt, and he suggested that the term "medical debt" may be a misnomer.
"Sometimes I really struggle to call it medical debt, because often people don't even owe it in the first place, or they didn't necessarily sign up for it," Chopra said.
The CFPB's hearing Tuesday was part of the Biden administration's effort to rein in what officials have dubbed "junk fees." As part of the same effort, the CFPB, the Treasury Department and the Department of Health and Human Services on Friday announced their intention to jointly probe financial products used to pay for medical care and the potential consumer harm they cause.
The agencies are trying to understand the incentives that drive health care providers to push such credit products on consumers. Chopra's comments indicate the CFPB believes it has jurisdiction, and is willing to exercise its authority over what officials believe are unfair fees in health care.
The CFPB, Treasury and Department of Health and Human Services are
The White House has also said that the joint inquiry will explore whether efforts to convince consumers to sign up for medical credit cards and loans are breaking the law.
