FTC Urged to Investigate Deceptive Medical Credit Cards, Loans

Quick-fix financial products come with sky-high interest rates, questionable financing terms for patients

WASHINGTON, DC – Senators Edward J. Markey (D-Mass.), Bernie Sanders (I-Vt.), and Bill Nelson (D-Fla.) today asked the Federal Trade Commission (FTC) to investigate financing companies and health care providers who may be utilizing unfair or deceptive practices to lure unsuspecting consumers to sign up for medical credit cards and loans to pay for expensive medical procedures not covered by health insurance. The financial products, often offered to patients immediately following or in anticipation of expensive medical or dental procedures, are being increasingly used by elderly or low income individuals who may not otherwise be able to pay for medical or dental services.  

“We are concerned that rather than alleviating the pressure of medical costs, some of the products available in the current market may actually drive consumers further into debt,” write the senators to FTC Chairwoman Edith Ramirez. “As medical debt continues to place a heavy burden on millions of Americans, it is imperative that financial products being offered as seemingly quick fixes to cover the costs of medical procedures are not unfairly or deceptively affecting consumers.”

A copy of the letter to the FTC can be found HERE.

In many cases, these questionable financial products are tied to deferred interest plans, meaning that if payments are late or if the debt is not paid in full by the due date, high interest rates are retroactively applied to the patient’s original balances, rather than to the amount still owed. The interest on deferred plans is typically substantially higher than the rate on standard general purpose credit cards. One report put interest rates as high as 33 percent for these financial products, resulting in one patient’s monthly repayments adding up to one third of her monthly Social Security benefits. These financial terms are not always adequately disclosed or explained to consumers.  

In the letter, the senators ask the FTC if it has received any complaints related to medical financial products and if the commission took any action on the complaints, as well as if the commission believes information provided to consumers offered these medical financial products is sufficient to ensure consumers understand the repayment terms, fees, and general nature of the products. The lawmakers also ask specifically about the Stark Law and the prohibition that physicians may not directly profit from their own referrals.