STAMFORD – Synchrony and Wells Fargo, two of the country’s largest providers of health care financing, are facing scrutiny from a group of U.S. senators, including Connecticut Sen. Chris Murphy, who said that they are concerned that medical credit card providers are trying to profit off patients with deceptive promotions and unfair terms.
Murphy and four other senators outlined their misgivings in a letter sent last week to Brian Doubles, chief executive officer and president of Stamford-based Synchrony, and Wells Fargo CEO and President Charles Scharf. The letter supports legislation proposed by Murphy that seeks to make health care providers’ handling of patient debt fairer and more transparent.
“[T]he current structure of our health care system often requires that patients enter into medical debt in order to access services they need,” the senators said in the letter. “Within that context, patients – often under duress because of concerns about their medical care – are being pushed into and then locked into medical credit cards despite the availability of alternative payment options that might be more beneficial and offer lower interest rates.”
Democrats Edward Markey and Elizabeth Warren, both of Massachusetts; Independent Bernie Sanders, of Vermont; and Democrat Sherrod Brown, of Ohio, joined Murphy, a second-term Democrat, in signing the letter.
In a statement Tuesday, Synchrony spokesperson Lisa Lanspery said that the company’s CareCredit business is “a responsible lender providing flexible health care payment options for consumers to pay for non-emergency treatment they need and want.”
CareCredit provides financing for treatments and procedures that the company said are not typically covered by insurance, or in cases when insurance does not cover the full amount. It also helps pay for deductibles and co-payments.
“Thousands of times each day, people are using their CareCredit health, wellness and beauty credit card to have important dental work done, be fitted with new hearing aids, have vision or cosmetic procedures and get care for a beloved family pet,” says an excerpt on the CareCredit website.
CareCredit credit cards are used by more than 11 million cardholders and accepted at more than 250,000 “enrolled provider and health-focused retail locations,” the website says.
In its annual report for 2021, Synchrony noted that its health and wellness sales platform, which includes CareCredit cards, produced $2.3 billion, or 15 percent, of its total interest and fees on loans for that year.
A message left for Wells Fargo was not immediately returned.
Among their concerns, the senators questioned medical credit card promotions.
“Many medical credit card companies have lured patients with pitches of ‘no interest’ periods ranging from six to 24 months, which are actually deferred interest promotions that are controversial and allegedly inherently deceptive,” they said in the letter. “These promotions tout ‘no interest’ but actually interest is accruing during the promotional period and will be retroactively charged if the entire balance is not paid off by the end of the promotional period.”
The senators also said that, “another disturbing feature of medical credit cards is that the available credit is typically set to the cost of the service,” resulting in the card being maxed out immediately and damaging cardholders’ credit scores.
Lanspery said that CareCredit, “works hard to ensure our products are offered responsibly and with clear, simple, transparent terms so consumers can make well-informed decisions about financing their care. Every credit card application is underwritten based on a consumer’s credit worthiness and ability to repay the balance.”
At the end of the letter, the senators included 16 questions – including queries about Synchrony’s and Wells Fargo’s number of medical credit card accounts and cardholders, and averages for balances, interest rates and the length of time it takes for cardholders to pay off their balances. The senators requested responses by Jan. 12.
“Protecting consumers is of paramount importance and we are committed to working with the senators and other public officials on gathering information in response to their request, including background about our business and the fair and transparent way we offer our products, so they better understand the benefits of financing for out of pocket medical expenses,” Lanspery said.
The letter also cited a 2013 order by the Consumer Financial Protection Bureau for GE Capital Retail Bank and then-subsidiary CareCredit to refund up to approximately $34 million to potentially more than 1 million consumers who the agency said were “victims of deceptive credit card enrollment tactics.”
Unrelated to that order, GE held an initial public offering in 2014 to spin off Synchrony into its own publicly traded company.
Based on its 2021 revenues, Synchrony ranked No. 236 on the 2022 Fortune 500 list of the largest U.S. corporations. San Francisco-headquartered Wells Fargo ranked No. 41.
Among related legislation, Murphy and Sen. Chris Van Hollen, D-Maryland, last November reintroduced legislation aimed at strengthening consumer protections and reforming medical debt practices. Among its provisions, the bill would enact standard practices to ensure “health care entities” communicate with consumers about medical debt and cap the annual interest rate growth for such debt, according to Murphy’s office.
pschott@stamfordadvocate.com; twitter: @paulschott
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