Banks Tell CFPB No Card Late Fee Data Unless Rulemaking Deadline Extended

The Consumer Financial Protection Bureau (CFPB) may need to extend the deadline to submit comments on its Advance Notice of Proposed Rulemaking (ANPR) about credit card late fees if it wants to have meaningful feedback from stakeholders. 

On June 22, the CFPB took its first step to change the regulation affecting credit card fees. It published an ANPR seeking data about credit card fees and late payments. Additionally, the CFPB also asked card issuers about their revenue and expense, the potential deterrent effect of late fees and the role late fees play in credit card companies’ profitability. 

The bureau gave 30 days for stakeholders to reply, until July 22, and at the time of this publication (July 18) only 11 responses have been received, none of which provide information that would allow the agency to design new rules. However, two of the 11 respondents asked the CFPB to extend the deadline to be able to gather the information requested. 

One of the respondents, representing some of the major banking associations in the country like the American Bankers Association, Bank Policy Institute, Consumers Bankers Association or Independent Community Bankers of America (the associations), urged the CFPB to provide a 60-day extension of the July 22 deadline, moving it towards the end of September. 

“Part of the reason for this extension request is that this ANPR is unexpected, given that action on this matter was not listed in Unified Agendas or the Spring Regulatory Agenda, published the evening before the ANPR was announced, and was apparently not submitted to the Office of Information and Regulatory Affairs as part of the development of that agency Agenda,” said the associations in a letter sent to the bureau.  

The associations seem willing to submit the information required, but given the “complex and comprehensive” information sought in the ANPR, the associations foresee that their members will need more time to produce the data points. 

The rest of the comments received so far are divided into those who oppose any late fee — mostly individuals — and those who defend these fees as an incentive for consumers to pay their bills on time. 

The CFPB hasn’t publicly said that it will change the existing rules on late fees, the CARD Act, just that this ANPR will help in assessing whether late fees are “reasonable and proportional.” While the notice published only seeks to gather information at this point, the CFPB is reviewing the Fed’s immunity provision, and it will determine whether adjustments in late fees are needed. 

In an 11-page questionnaire, the CFPB is requesting information about factors used by card issuers to set late fee amounts; card issuers’ costs and losses associated with late payments; the deterrent effects of late fees; cardholders’ late payment behavior; methods that card issuers use to facilitate or encourage timely payments, including autopay and notifications; card issuers’ use of the late fee safe harbor provisions in Regulation Z; and card issuers’ revenue and expenses related to their domestic consumer credit card operations. 

Interestingly, the Bureau also poses some questions about the safe harbor provisions — this is a $30 and $41 limit for the first and subsequent late payments — and how card issuers would react if they couldn’t use these safe harbor provisions. Alternatively, the CFPB is also questioning how card issuers would use a cost analysis to determine the amount of late fees. The CFPB seems particularly interested in finding out what a cost-benefit analysis would determine the right late fee is. This may be an approach to establishing a “proportionate” penalty, related to the cost incurred from a late payment. 

However, if the CFPB doesn’t grant the extension requested by some of the respondents, it risks not having information at all. There are only four days more to receive feedback. 

Read more: CFPB Wants to Use Banks’ Revenue Data to Change Card Late Fees