Critics vow to challenge CFPB final credit card rule

Within hours of the release of the Consumer Financial Protection Bureau’s final rule restricting credit card late fees to $8.00 at the largest issuers, opponents began lining up to threaten procedural and legal challenges to the plan. Those challenges include a planned lawsuit and an effort to convince members of Congress to nullify the rule.

The CFPB unveiled the long-awaited final rule on Tuesday. The rule would lower most credit card late fees for the largest issuers, defined as those with more than one million open accounts. The rule will go into effect 60 days after it is published in the Federal Register.

The agency said that the issuers impacted by the final rule account for more than 95% of the total outstanding credit card balances. Late fees would be limited to $8.00 a month, although credit card companies could charge more if they can demonstrate that they need higher fees to cover their costs. “CFPB data shows that smaller issuers tend to charge lower rates and fees to their borrowers, while the vast majority of the largest issuers charge close to the maximum allowable late fee amount,” the agency said, in explaining the rationale behind the rule.

“The announcement of this rule comes after an extensive process, consideration of thousands of comments, and a great deal of research into the credit card market,” CFPB Director Rohit Chopra said, in announcing the rule. “We have learned a lot, and we have real concerns about how the competitive process is working in this market.” He said that credit card issuers charge late fees to consumers even when their payments are only a bit late.

 

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