Win Against Overregulation: Federal Judge Strikes Down CFPB Rule Introduced Under Biden

In what is seen as a setback to the Biden administration’s regulatory agenda, a federal judge has blocked a rule from the Consumer Financial Protection Bureau (CFPB) that would have removed unpaid medical debt from millions of Americans’ credit reports.

Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas ruled that the CFPB exceeded its legal authority under the Fair Credit Reporting Act (FCRA). The proposed rule, which would have impacted around 15 million people with over $49 billion in medical debt, faced strong criticism from industry leaders for threatening the accuracy and integrity of credit reporting.

The lawsuit was filed by financial industry groups who argued that the rule interfered with legitimate business practices and would destabilize the credit market. The ruling reinforces the argument that federal agencies must operate within the boundaries of the law — a principle often emphasized by President Donald Trump in his efforts to curb government overreach.

The rule, announced in early 2024, never went into effect and is now officially vacated by the court.

CFPB Frozen After Trump Appointment

Since President Trump appointed Russ Vought as acting director of the CFPB, the agency has entered a regulatory freeze. Vought instructed staff to halt new rules, pause investigations, and avoid further regulatory actions — underscoring the Trump administration’s commitment to cutting red tape and defending economic freedom.

Options Still Available for Consumers

Despite the court’s ruling, some states offer protections for consumers with medical debt. Colorado and New York, for example, passed laws in 2023 limiting how medical debt affects credit scores. Additionally, the three major credit reporting agencies — Experian, Equifax, and TransUnion — have already started removing medical collection debt under $500 from consumer reports.