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CFPB chief sets regulatory agenda on junk fees, medical debt and AI

Consumer Financial Protection Bureau Director Rohit Chopra testifies before the Senate Banking, Housing and Urban Affairs Committee hearing on April 26, 2022.

Tom Williams | Cq-roll Call | Getty Images

Rohit Chopra has big plans for the Consumer Financial Protection Bureau to tackle artificial intelligence threats, medical debt reporting, exorbitant credit card fees and other so-called junk surcharges.

But that agenda is threatened by legal wrangling over the agency’s financing structure, which a federal appeals court ruled last year to be unconstitutional. When the CFPB was created 12 years ago in response to the global financial crisis, Congress chose to fund it through transfers from the Board of Governors of the Federal Reserve rather than appropriations.

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Republican lawmakers have been critical of the agency’s concept for years. One of its harshest critics was Rep. Andy Barr, R-Ky., who called the CFPB “the most uncontrolled and irresponsible agency in the entire federal government.” He accused Chopra of acting “unilaterally and arbitrarily” without proper oversight.

The Supreme Court is scheduled to hear an appeal of the lower court’s ruling in early October.

Potential “avalanche of lawsuits” and corresponding market uncertainty are top concerns for Chopra, who was named CFPB director in October 2021.

“This is not the first time the CFPB has been attacked like this,” Chopra said in an interview with CNBC this week. “It has come out and continues to do important work for the public.”

With that in mind, Chopra laid out some of the CFPB’s top policy goals for the coming months:

consumer debt

medical debt

Chopra said tens of millions of Americans are struggling with medical debt.1 in 5 affected by total $88 billion in unpaid medical bills According to the CFPB report, it is currently being collected.

According to a 2022 Kaiser Family Foundation report, total U.S. medical debt exceeded $195 billion in 2019, with about 100 million adults owing debts ranging from about $500 to more than $10,000.

“Medical debt has become a pain point for Americans,” Chopra said. “They often get caught in all kinds of red tape between insurance companies (and) hospitals.”

Debt collectors are adding medical debt to credit reports as a coercive device, compounding the crisis. Chopra said the CFPB is “taking a hard look at whether it’s appropriate to include medical debt on your credit report.”

The agency has ordered the companies, as well as credit reporting agencies, to stop collecting, offering or reporting invalid medical debt. Exfax, TransUnion and Experian Obliged to be with Applicable Policy Changes.

trash fee

artificial intelligence

Chopra also worries that AI could disrupt the banking industry, negatively impacting consumers.

For example, if companies use AI for loan verification, they risk non-compliance if the system fails to provide the information. “delinquenent conduct” Chopra said the notice clearly stated why the loan was rejected.

“If an algorithm or AI can’t clearly explain how it made a decision, if it’s just a black box, lenders really can’t use it because otherwise they can’t abide by the basic protections that already exist in the law,” he said.

Banks that shift from call centers to automated customer support models also risk violating federal protections, he said. Chopra said the CFPB is working on ways to train chatbots on sensitive personal data.

“It’s clear that a lot of this is going to reshape banking and we want to make sure we take steps today to make sure the technology evolves in a legally compliant way,” he said.

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