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CFPB Late Fee Lawsuit Moved Back to DC Court

Consumer Financial Protection Bureau

This round of jurisdictional ping pong goes to the CFPB.

A federal judge in Texas has bounced a lawsuit challenging the consumer protection agency’s credit card late fees cap back to Washington, D.C, Reuters reported Tuesday (May 28).

U.S. District Judge Mark Pittman in Fort Worth ordered the case be moved out of his court for the second time, after a federal appeals court had previously blocked him from doing so but then later gave up jurisdiction.

The Reuters report noted that this move could give the Consumer Financial Protection Bureau (CFPB) a home-field advantage as it defends its $8 cap on credit card late fees against the suit, filed by industry groups including the U.S. Chamber of Commerce and the American Bankers Association (ABA).

The CFPB had sought to move the case out of Fort Worth, as the venue is seen as a favorite among litigants challenging Biden administration regulations.

Pittman, appointed by former President Trump, blocked the credit card late fee rule from taking effect earlier this month, but only after another court — the 5th Circuit in New Orleans — reversed his decision to move the case to D.C.

According to Reuters, his only reason blocking the rule was because the 5th Circuit had in 2022 ruled CFPB’s funding structure was unconstitutional, making any regulations it adopted unconstitutional as well.

The U.S. Supreme Court earlier this month issued a 7-2 ruling that the bureau’s funding mechanism is constitutional.

CFPB Director Rohit Chopra issued a statement soon after the ruling that that the Supreme Court had rejected a “radical theory that would have devastated the American financial markets” and “made it clear that the CFPB is here to stay.”

Soon after the ruling was handed down, PYMNTS wrote that the decision sets the stage for the CFPB to proceed with rulemaking on open banking and to continue to try to shape banking fees such as credit card late fees.

“It’s likely though that legal challenges will continue to be lobbied against the agency and each of those efforts, but the major fundamental challenge of how the agency would be structured, and whether years of efforts might be exposed to other legal challenges, seems to have been put to rest,” that report said.