Judge scraps CFPB credit card late fee rule

A federal judge voided a Consumer Financial Protection Bureau rule capping credit card late fees at $8, after the agency agreed with opponents that the rule was illegal.

Details: U.S. District Judge Mark Pittman in Fort Worth, Texas granted a joint request by the CFPB and other groups to scrap the rule.

Background: After defending the credit card late fee rule and a subsequent lawsuit challenging the rule, the CFPB reversed course and filed a joint motion with the plaintiffs in the case asking the court to vacate the rule and dismiss the remaining claims with prejudice. In the joint motion, the CFPB indicated that it agreed with plaintiffs that the Bureau violated the CARD Act and that the late fee rule is contrary to law.

More: The CFPB in March 2024 issued an ICBA-opposed rule that would cut the credit card late fee safe harbor under the CARD Act from the current levels of $30 for the first violation to $8, without inflation adjustments. The rule would apply to issuers with 1 million or more open accounts.

ICBA View: In a national news release after the CFPB issued the rule last year, 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. ICBA also opposed the rule in a 2023 letter to the CFPB.