Credit card late fee proposal ‘gross deviation’ of CFPB rulemaking standards

The Consumer Financial Protection Bureau’s (CFPB) credit card late fee proposed rule is a “gross deviation from the Bureau’s standards for issuing policies grounded in sound and relevant data,” CUNA wrote Wednesday. The proposed rule would amend Regulation Z to uniformly reduce the level of permissible late fees charged on credit cards.

“We strongly object to this proposal and the process by which it was promulgated,” said CUNA President/CEO Jim Nussle. “This dramatic change to the long-held standard for late fees will impact the ability of small issuers to offer credit card programs and is a solution in search of a problem. The proposal is built on flawed and incomplete data and additional research is required by law.”

Federal credit unions—subject to a statutory usury cap—would be competitively disadvantaged compared to other card issuers in responding to a dramatically reduced permissible late fee. The Bureau did not study these potential effects.

CUNA commissioned an economic analysis on the proposal that found CFPB failed to provide a “valid and reliable” analysis of the proposal’s impact on card issuers and consumers, and that it failed to study the rule’s impact on small business as required.

 

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