CFPB seeking comment on whether credit card late fees are reasonable

Questioning whether the credit card late payment fees levied by credit unions and banks are reasonable, the Consumer Financial Protection Bureau (CFPB) announced Wednesday it is seeking comment on whether the charges are exorbitant.

“I am concerned that some credit card companies may actually want consumers to be a little late on their payments, given the billions of dollars in revenue generated on late fees,” CFPB Director Rohit Chopra said, in announcing the initiative.

Credit card issuers have immunity as long as the late fees they charge are considered reasonable; issuers are also permitted to increase their fees to adjust for inflation.

“These provisions in the…rule give credit card companies immunity from enforcement actions if they charge fees that aren’t reasonable or proportional,” Chopra stated. “This legal provision to sidestep liability—essentially a go-around—makes it easier on credit card companies to not have to justify their compliance with Congressional mandates governing penalties.”

 

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