California is moving to the forefront of the battle against the burden of medical debt on credit reports, with Attorney General Rob Bonta championing the cause. In a recent development, Bonta expressed his support for a Consumer Financial Protection Bureau (CFPB) proposed rule to ban medical debt from credit reports, as the Office of the Attorney General reported. Bonta, alongside Senator Monique Limón and consumer advocacy groups, has been pushing for state legislation through SB 1061 to prevent medical debt from damaging credit scores.
In a noteworthy example of advocacy, Attorney General Bonta said, "When someone is scared and in pain, the last thing they should think about is whether seeking care will take away their ability to buy a house or land a job." His statement emphasized the stark reality for many that medical debt can precipitate a cycle of financial harm that is difficult to break free from. Bonta applauded the CFPB for introducing a standard that supports consumer protections while allowing states to implement even stronger measures where needed, according to the Office of the Attorney General press release.
Including all forms of payment to healthcare providers in the definition of medical debt – including those settled through credit cards – is a critical aspect, as highlighted by Bonta in his letter to the CFPB. Many Californians resort to credit cards that they cannot pay off, leading to financial distress. A significant 25% now find themselves charging medical or dental bills to credit cards, up 6% from the previous year, showing an acute rise in this indirect form of medical debt, especially among historically marginalized groups.
The Attorney General is actively contributing to a broader movement for financial justice. Prior to this, in April, Bonta supported the CFPB's overdraft fee rule proposal, and in February, warned smaller financial institutions that certain fee practices may conflict with both California's Unfair Competition Law, and the federal Consumer Financial Protection Act. The press release detailed that these initiatives reflect an ongoing dedication to shield Californians from the systemic entrapments of predatory financial policies, with overdraft fees alone costing California consumers an estimated $200 million in 2022.
