The U.S. Chamber of Commerce filed a lawsuit against the Consumer Financial Protection Bureau, aiming to stop the agency from implementing its new rule to limit credit card late fees.
The trade association said in its suit that the CFPB violated the law by preventing issuers from collecting late fees that are “reasonable and proportional,” promulgating a rule that is “arbitrary and capricious,” and doing so with funds drawn in violation of the Appropriations Clause, according to a Thursday (March 7) update posted on the U.S. Chamber website.
“The CFPB is acting outside its authority and the Chamber’s lawsuit seeks to protect American cardholders who pay their bills on time and enjoy the numerous benefits of diverse credit card offerings from America’s financial institutions,” Neil Bradley, executive vice president, chief policy officer and head of strategic advocacy at the U.S. Chamber of Commerce, said in a Thursday press release.
Reached for comment by PYMNTS, a CFPB spokesperson said in an email: “The final rule closes a longstanding loophole abused by credit card giants to turn late fees into a major revenue stream, charging consumers more than five times the companies’ associated costs. The CFPB will defend this rule, which will rein in these excessive charges and put $10 billion back in consumers’ pockets.”
When announcing the new rule Tuesday (March 5), CFPB Director Rohit Chopra said in a statement that the credit card industry takes in more than $14 billion in late fee revenue each year and that credit card issuers charge those fees even when a consumer’s payment is “only a little bit late” or when the delay is outside their control.
The U.S. Chamber said in its Thursday press release that the CFPB’s rule will punish those who pay their credit card bills on time. Placing a limit on late fees means that the costs associated with late payments will be passed on to all credit card users, including those who have never made a late payment, Bradley said in the release.
The CFPB’s rule also came under fire at a Thursday hearing on Capitol Hill.
Read also:
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