ICBA backs congressional challenge to credit card late fee rule

ICBA expressed support for Rep. Andy Barr’s (R-Ky.) introduction of a resolution to nullify the Consumer Financial Protection Bureau’s final rule to cut credit card late fees.

Barr Resolution: If passed by Congress, the Congressional Review Act resolution would express congressional disapproval of the rule and nullify its implementation. Senate Banking Committee Ranking Member Tim Scott (R-S.C.) has also said he would fight the rule via the Congressional Review Act.

ICBA Letter: In a letter to Barr, ICBA said the rule, which includes an exemption for community banks, is part of a broader effort to mischaracterize legitimate practices as “junk fees” and would carry unintended consequences for American consumers.

Rule Details: The CFPB rule:

• Cuts the credit card late fee safe harbor under the CARD Act from the current levels of $30 for the first violation and $41 for subsequent violations to $8, without inflation adjustments.

• Applies to issuers with 1 million or more open accounts, which allows the CFPB to avoid analyzing the rule under the Small Business Regulatory Enforcement Fairness Act.

• Allows covered issuers to charge fees above the threshold as long as they can prove the higher fee is necessary to cover their collection costs.

ICBA Response: In a national news release after the rule’s release, ICBA said the rule sends the wrong message that punctual credit card payments are not a significant priority, which will harm consumers by leading to more late payments and additional interest charges.