Chambers of Commerce and Business Associations Sue CFPB Over Credit Card Late Fee Caps

A group of businesses has sued the Consumer Financial Protection Bureau (CFPB) over a new rule that caps credit card late fees charged by major issuers.

The consumer watchdog group finalized a rule Tuesday that would cap late fees at $8, 75 percent lower than the average $32. The CFPB estimates that this rule will save Americans more than $10 billion each year in late fees, or an average of more than $200 per person.

But opponents say the rules go beyond the agency's authority and will result in more late payments, more debt, lower credit scores and less access to credit.

The U.S. Chamber of Commerce, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, Consumer Bankers Association (CBA), American Bankers Association (ABA), and Texas Business Association filed suit against the CFPB in Northern District Court. of Texas.

“By significantly limiting late fees, the CFPB not only discourages responsible credit card use, but also imposes higher costs on consumers and limits their choice of credit card options and benefits.” said Neil Bradley, Vice President, Chief Policy Officer and Head of Strategy. Advocacy on the floor.

“The CFPB is acting in excess of its authority, and the Chamber of Commerce’s lawsuit is a lawsuit against Americans who pay their bills on time and enjoy the many benefits of the wide variety of credit cards offered by U.S. financial institutions. It is intended to protect cardholders.”

The new rules were introduced as part of the Biden administration's efforts to crack down on “junk fees.” President Biden also announced a “strike force” to crack down on price gouging on Tuesday, days before he is scheduled to address voters on the economy in Thursday's State of the Union address.

“We have seen the era of junk fees really creeping into so many sectors of the economy and across government. We're just trying to make sure that people receive fair treatment,” CFPB Director Rohit Chopra told reporters ahead of the announcement.

Consumer watchdog groups applauded the move. Liz Zelnick, director of the Economic Security and Corporate Power Program at Accountable.US, accused business groups of filing lawsuits that were “motivated by greed.”

“The U.S. Chamber of Commerce is once again doing the dirty work of its big bank members, who are notorious for jacking up prices for Americans, including charging as much as $41 in late fees on credit cards,” Zelnick said. “On top of that, they deliberately chose a conservative-leaning, industry-friendly court in hopes of derailing any regulations that would stifle their profits.”

But business groups denounced the cap on credit card late fees as political and asked courts to block enforcement of the rule.

“ABA President and CEO Rob Nichols said, “We have received comments from industry and other stakeholders that indicate this rule exceeds the agency's statutory authority and will harm rather than help consumers.'' “The CFPB ignored us, and we were reluctantly forced to file a lawsuit with federal regulators.” “This rule is about politics, not policy, and we look forward to the court's review.”