- CFPB’s $8 cap on credit card late fees to take effect in May
- Banks say they face millions in compliance costs under rule
The US Chamber of Commerce and banking trade groups asked a federal judge to pause a Consumer Financial Protection Bureau rule capping credit card late fees before the judge rules on whether the case belongs in Texas.
Banks and other credit card issuers don’t have time to wait for a ruling on the case venue because the CFPB’s regulation capping credit card late fees at $8 is set to take effect on May 14, the Chamber and its co-plaintiffs said in a motion filed late Tuesday in the US District Court for the Northern District of Texas. Late fees can be $30 for the first missed payment and $41 for any missed payment in the subsequent six months under existing rules.
Credit card issuers will have to ensure customers receive disclosures by March 29 outlining the changes required by the rule, making it vital for the court to rule by March 22 on the plaintiffs’ request for a preliminary injunction temporarily blocking the new late fee cap, the motion said.
“Plaintiffs face the loss of millions of dollars in unrecoverable compliance costs if the Final Rule is not enjoined,” said the industry groups, including the US Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and the Fort Worth Chamber of Commerce. If the court denies their motion for an early injunction, the plaintiffs said they planned to go to the Fifth Circuit to get an order requiring the case to stay in Fort Worth, as well as a temporary pause on the rule.
The fight over over the proper forum to challenge the CFPB’s credit card late fee rule is part of a broader battle over alleged venue shopping by corporate interests and activists seeking to block federal policies.
Read more in Bloomberg Law