Credit card late fee proposal is bad rulemaking

This week we filed comments with the Consumer Financial Protection Bureau (CFPB) on its proposed rule that would cap credit card late fees. We believe this proposal is a serious deviation from the bureau’s rulemaking standards, as the proposal itself and the process by which it was developed is seriously flawed.

This proposal would have negative impacts on card issuers, consumers, and availability of credit. Federal credit unions are subject to a statutory usury cap that would put them at an additional competitive disadvantage compared to other issuers.

Our comments demonstrate that the data used to create the proposed rule comes from banks with more than $100 billion in assets and does not include credit unions at all. However, it will impact credit unions’ ability to offer card programs, manage program risks, and keep costs down for all cardholding members.

CUNA commissioned an economic analysis of the rule as well, which we submitted to the bureau. Edgeworth Economics found CFPB failed to provide “valid and reliable” analysis of the rule’s impact—as required—and did not study how a fee cap would impact card issuers and consumers, especially in our high-interest environment.

 

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