Six trade groups sued the Consumer Financial Protection Bureau on Thursday over a new rule that would cap most credit card late fees at $8 a month.
The lawsuit, filed in federal court in Fort Worth, asks the court to vacate the rule, which the consumer bureau completed two days ago. The complaint says the bureau violated laws about agency rule-making and exceeded its statutory authority, and argues that consumers will be financially harmed if the rule takes effect.
“Late fees encourage timely payments, which in turn help card issuers both to manage credit risk and to lower costs, allowing them to offer more competitive terms and features,” the trade groups wrote in their complaint.
A spokeswoman for the consumer bureau said the rule “closes a longstanding loophole abused by credit card giants to turn late fees into a major revenue stream.” The rule, which applies to issuers that have more than one million open credit card accounts, would slash most fees from their current average of $32, saving households $10 billion a year, according to the consumer bureau’s estimates.
Read more in The New York Times