Consumer Financial Protection Bureau headquarters in Washington, D.C. Credit: Adobe Stock
The CFPB and the U.S. Chamber of Commerce moved this week to officially vacate the CFPB’s March 2024 rule capping credit card late fees at $8, drawing sharp criticism from consumer advocates and raising concerns within the financial industry about fairness and regulatory consistency.
In a joint motion filed Monday with the U.S. District Court for the Northern District of Texas, the two parties agreed to a proposed consent judgment that would erase the rule entirely, without following the typical public comment process required under the Administrative Procedure Act. The CFPB’s original rule was estimated to save consumers more than $10 billion annually by lowering typical late fees from $32 to $8 for issuers with more than one million open accounts.
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“This decision will allow big banks to exploit consumers to the tune of $10 billion annually by charging inflated late fees that far exceed what late payments cost them to collect,” Chi Chi Wu, senior attorney with the National Consumer Law Center, said.
The reversal came after a Texas judge granted a preliminary injunction halting the rule just before it was set to take effect in May 2024. At the time, the Chamber and co-plaintiffs, including major banking associations, argued the rule was unlawful and burdensome. America's Credit Unions supported the efforts of those involved in the lawsuit.
In a statement to the media Tuesday afternoon, America's Credit Unions President/CEO Jim Nussle said, "The credit card late fees rule would have upended that system and increased costs for all cardholding members, while also decreasing the availability of credit for those who need access the most. Credit unions were clear with their concerns about the negative impact of the CFPB's credit card late fees rule, and we appreciate the CFPB agreeing to settle the lawsuit challenging the rule and vacate it."
DCUC President/CEO Anthony Hernandez said, "This settlement represents a critical step forward in reforming regulatory overreach that would have significantly hindered credit unions’ ability to serve their members effectively. The CFPB’s final rule not only exceeded its statutory authority under the Credit CARD Act but also posed a direct threat to the financial well-being of millions of Americans — including those in vulnerable and underserved communities."
Lauren Saunders, associate director of the National Consumer Law Center, added, “The CFPB and Chamber are depriving the public of their right to give feedback about the hardship this will cause working families."
For credit unions, the vacated rule had minimal direct effect, applying only to institutions with over one million open credit card accounts, such as Navy Federal Credit Union, but the broader implications signaled uncertainty for future rulemakings and raised equity concerns for community financial institutions.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
