- CFPB rule would cap late fees at $8, down from $30 average
- Banks, GOP say Biden administration playing politics
The Consumer Financial Protection Bureau’s landmark rule capping credit card late fees at $8 faces a bumpy path ahead, as industry groups eye legal challenges to block it from taking effect.
Banks have already blasted the regulation released Tuesday, arguing the CFPB used a shoddy process and incorrect math. Covered companies will soon have to slash their average credit card late fees, down from an average $30 for a first missed payment and $41 for any missed payments within the following six months.
The rule threatens to cut back on late-fee profits for big banks such as Capital One Financial Corp., JPMorgan Chase & Co., and Bank of America Corp. that have at least 1 million open accounts, while exempting smaller banks and credit unions. The CFPB said banks generated $14 billion in credit card late fee income in 2022.
The US Chamber of Commerce on Tuesday said it plans to file a lawsuit “imminently” challenging the regulation. Supporters of the rule say its consumer benefits outweigh the costs to banks, but a lawsuit filed in a court friendly to legal challenges could put the rule on ice.
“We think it will be brought in a sympathetic district where industry is likely to get the rule’s implementation delayed while the case is considered,” Ian Katz, a policy analyst at Capital Alpha Partners, said in a client note.
Read the full article at Bloomberg Law