Republicans Introduce Bill to Nullify CFPB Credit Card Fee Rule

Nearly a week apart, two lawmakers introduced bills in the U.S. Senate and House of Representatives as an attempt to nullify the CFPB’s recent final rule that dropped typical credit card late fees of $32 and capped them at $8.

The rule, which was finalized in March, is now being challenged in the Senate as Sen. Tim Scott (R-S.C.) introduced his version of the “Resolution of Disapproval for the Consumer Financial Protection Bureau’s Credit Card Late Fee Rule” on Monday. This is a similar bill to one that was introduced late last month in the House by Rep. Andy Barr (R-Ky.).

If passed by both branches, the resolution would not only show congressional disapproval of the rule, but would nullify implementation of the rule.

In separate letters sent to Barr and Scott on Monday, America’s Credit Unions President/CEO Jim Nussle expressed his support of the lawmakers’ efforts to nullify the rule.

“The CFPB’s misguided final rule on credit card fees clearly demonstrates a misunderstanding on how credit cards work,” Nussle wrote. “Credit unions work to empower their members’ decision making and clearly define their late fees to suit the needs of their membership. An $8.00 late fee does nothing to encourage responsible consumer behavior. We would note that various governmental entities, including the federal government, set late fees above that $8.00 level for a wide range of payments.”

The CFPB’s rule threshold only applies to the nation’s largest credit union, Navy Federal Credit Union of Vienna, Va. ($170 billion in assets, 13.3 million members). In March, Nussle said he believed the rule will hurt consumers by potentially trapping “millions of consumers in a cycle of debt instead of fulfilling their intended purpose of protection.”

In a March 29 letter to Rep. Barr, Independent Community Bankers of America President/CEO Rebeca Romero Rainey threw her support behind Barr’s bill and similarly stated the rule’s potential unintended consequences.

“ICBA believes the CFPB rule will carry unintended consequences for American consumers,” the letter stated. “Specifically, it could result in consumers making more late payments and incurring additional interest charges that would harm them in the long term. Credit card late fees — which are clearly disclosed — deter late payments and help offset the significant costs of collection for issuers. Notably, late fees are widely used by all types of businesses — and by federal, state and local governments — to encourage timely payment.”

Rainey continued, “Thank you for introducing this resolution of disapproval under the Congressional Review Act. Passage of this resolution would nullify a rule that will interfere with the operation of a free market, fix prices and limit consumer choice.”

The credit union trade organization also supported the lawsuit filed last month to seek a preliminary injunction to stop implementation of the CFPB’s credit card fee late rule. The U.S. Chamber of Commerce filed that lawsuit just days after the rule was finalized.

Chances of the resolutions passing appeared to be slim as there are only 16 more weeks left on the legislative calendar before the election in November.