CBA Joins Litigation Seeking to Halt CFPB’s Illegal Credit Card Rulemaking

The Consumer Bankers Association (CBA) today announced that it is jointly pursuing legal action with five other leading business groups against the Consumer Financial Protection Bureau (CFPB) in issuing its final rule to unilaterally and arbitrarily limit the safe harbor amount for overdue credit card payments. The complaint will be followed by a motion for preliminary injunction requesting immediate relief from the final rule until the court makes a final decision on the merits of the case. CBA President and CEO Lindsey Johnson issued the following statement on the litigation:

“CBA and our member banks do not take litigation lightly. Unfortunately, the CFPB leaves us little choice but to challenge its rulemaking. The CFPB once again failed to follow the requirements under the Administrative Procedure Act and has not properly considered the costs to businesses or consumers. Not only will this rule drastically alter the credit card landscape, but it would potentially harm millions of Americans’ long-term financial health as well. “In slashing credit card late fees, the CFPB may be delivering a few short-term headlines for a White House that is searching for political wins. But for the 74 percent of consumers that pay their bills on time, this is consumer redistribution, not consumer protection. The CFPB concedes that this rule could increase the cost of credit by as much as two percentage points. “Further, an $8 penalty fee harms the minority of consumers that the CFPB purports to be helping. The CFPB’s rule makes it easier for consumers to pay late on their credit card bills. But late payments have deeper and longer-lasting impacts to consumers’ financial health than late fees – such as ballooning payments and damaged credit scores. “We look forward to making the case that the Bureau should follow the law and not prioritize politics over the people the agency is supposed to protect: consumers.”

What Happened

• On February 1, 2023, the CFPB announced its notice of proposed rulemaking (NPRM) on credit card late fees, outlining its proposal to drastically alter the credit card late fee landscape.
• On February 7, 2023, President Biden announced during his State of the Union address plans to rein in “junk fees” across a variety of industries.
• Throughout August 2023, The White House, in coordination with the Progressive Change Policy Institution, held a number of events with Democratic lawmakers and CFPB Director Rohit Chopra on the issue.
• This comes as the White House looks to make “junk fees” a winning issue for President Biden’s reelection.

Why It Matters

The Washington Post debunked several claims included in the CFPB’s proposal to lower credit card late fees, calling the agency’s calculation’s “fuzzy math.”

CBA Advocacy

• Immediately following the CFPB’s NPRM on late fees, CBA issued a statement highlighting how the proposal disregards data and reality. You can read the statement HERE.
• To read CBA’s letter to the CFPB on the NPRM last year, click HERE and HERE.
• Following President Biden’s 2023 State of the Union address, CBA President and CEO issued a statement that the Administration mistakenly lumping bank fees into the “junk fees” narrative harms consumers the most. You can read the statement HERE.
• To read CBA’s letter to the U.S. Senate Committee on Banking, Housing, and Urban Affairs’ Subcommittee on Financial Institutions and Consumer Protection ahead of its hearing on “Taking Account of Fees and Tactics Impacting Americans’ Wallets,” click HERE.
• CBA commissioned a poll that found that nearly 60 percent of Americans believe that credit card late fees are legitimate. Key findings from the poll can be found HERE.
• CBA published a myth vs. fact blog post on the NPRM on late fees. You can get the facts HERE.
• CBA launched a public affairs campaign, Washington Wallet Watch, highlighting the harm this rule will have on consumers. You can learn more about the campaign HERE.
• Immediately following the CFPB issuing its final credit card late fee rule, CBA President and CEO Lindsey Johnson released a statement highlighting the harm it will have on consumers’ long term financial health. You can read the statement HERE.