ICBA, groups endorse challenge to credit card late fee rule

ICBA and other groups expressed support for House and Senate resolutions to nullify the Consumer Financial Protection Bureau’s final rule to cut credit card late fees.

Details: The resolutions—S.J.Res. 70 from Sen. Tim Scott (R-S.C.) and H.J.Res. 122 from Rep. Andy Barr (R-Ky.)—would express congressional disapproval of the rule and nullify its implementation.

Joint Letters: In letters to Scott and Barr, the groups said the CFPB rule would harm consumers who pay their credit cards on time by forcing issuers to increase costs while introducing long-term financial risk to the consumers it purports to help.

ICBA Advocacy: ICBA has previously expressed its support for the measures in letters to Scott and Barr. 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.

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.