A PYMNTS Company

Federal Appeals Court Rules Texas Judge Erred in Transferring Credit Card Late Fee Suit

By  |  April 8, 2024

A federal appeals court ruled on Friday that a Texas judge erred in transferring an industry-backed lawsuit challenging a federal agency rule on credit card late fees to another court in Washington, D.C.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    The 5th U.S. Circuit of Appeals, based in New Orleans, voted 2-1 in favor of business and banking groups who filed the lawsuit in Fort Worth, Texas. This ruling marks a significant jurisdictional victory for entities such as the U.S. Chamber of Commerce and American Bankers Association. The lawsuit, filed last month, targeted a rule issued by the Consumer Financial Protection Bureau (CFPB) regarding credit card late fees.

    Fort Worth, with its federal courthouse, has increasingly become a preferred venue for litigants challenging policies implemented by President Joe Biden’s administration. The controversy surrounding this case underscores broader concerns about litigants strategically selecting sympathetic courts or judges.

    Related: Mastercard Tells Congress Credit Card Competition Act Is Bad for Consumers, Businesses

    The CFPB rule under scrutiny aims to address what the agency terms “excessive” fees levied by credit card issuers for late payments, which the agency estimates to cost consumers a staggering $12 billion annually. According to the rule, credit card issuers with over 1 million open accounts are restricted to charging a maximum of $8 for late fees, unless they can substantiate the need for higher fees to cover their costs. Previously, these issuers could impose late fees ranging up to $30 or $41 for subsequent late payments.

    Source: Reuters