Agreement to vacate $8 late fee regulation sidesteps federal law giving the public the right to comment.
WASHINGTON, D.C. – Yesterday, the Consumer Financial Protection Bureau (CFPB) dealt a blow to struggling consumers by seeking to remove the cap on credit card late fees. The CFPB filed a joint agreement with the Chamber of Commerce and the banking industry asking a Texas court to vacate a March 2024 regulation that set the default or “safe harbor” amount for credit card late fees at $8. Consumer advocates raised alarm that the CFPB’s joint agreement with the Chamber will have a severe negative impact on consumers.
“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,” said Chi Chi Wu, senior attorney with the National Consumer Law Center. “This is yet another way that the current Administration’s actions are increasing costs and straining the budgets of hard-working families while lining the pockets of wealthy corporations.”
The CFPB’s final rule had lowered the default amount for credit card late fees from its previous high of $30 for the first late payment and $41 thereafter. The new rule allowed credit card companies to charge more than $8 if they demonstrated that $8 did not adequately compensate them for their costs associated with late payments.
Yesterday’s joint agreement with the Chamber does not require the CFPB to go through the notice and comment process required by the Administrative Procedures Act, the law that typically governs agency rulemaking.
“The CFPB and Chamber are depriving the public of their right to give feedback about the hardship this will cause working families,” said Lauren Saunders, associate director of the National Consumer Law Center. “Under the previous administration, the CFPB followed the rules, had a lengthy public process, and considered a mountain of evidence to develop the $8 late fee safe harbor. The new administration is circumventing transparency to pave the way for big bank junk fees.”
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