CFPB, Federal Agencies, State Agencies, and Attorneys General
Yesterday, the Texas federal district court hearing the industry lawsuit challenging the CFPB’s final credit card late fee rule (Rule) issued the following unusual order:
On March 10, 2024, this Court granted Plaintiffs’ Motion for Preliminary Injunction. The Court therefore has questions concerning the live causes of actions in this case and what next steps are appropriate to move the case along.… Continue Reading
Last Friday, May 10, the Texas federal district court hearing the lawsuit challenging the CFPB’s final credit card late fee rule (Rule) granted the plaintiffs’ preliminary injunction motion and stayed the Rule. The Rule was set to become effective tomorrow, May 14. The district court’s ruling followed the entry of an order by the Fifth Circuit vacating the district court’s order denying the plaintiffs’ motion for expedited consideration of their preliminary injunction motion and remanding the case to the district court with instructions to rule on the plaintiffs’ preliminary injunction motion by May 10.… Continue Reading
Last week ended with several new developments in the lawsuit challenging the CFPB’s final credit card late fee rule (Rule), both of which appear to reduce the likelihood that the Rule will be stayed before its May 14 effective date.
First, the CFPB filed a Petition for Panel Rehearing on April 18 and the Fifth Circuit has directed the plaintiffs to file a response by April 30. … Continue Reading
Consumer Financial Protection Bureau (“CFPB”) Director Rohit Chopra shared his insights at Consumer Bankers Association Live industry conference in Washington D.C. Reuters reported that Chopra told sideline reporters, “We are going to be looking into the credit card rewards market due to an increase in consumer complaints. What the marketing gurus and consultants are telling credit card issuers is that they should focus consumers’ attention on splashy rewards, but then withhold information from them when they’re paying lots of interest and could switch to a lower-rate card, even within the same bank.”… Continue Reading
On March 5, 2024, the Consumer Financial Protection Bureau (“CFPB”) issued its final credit card late fee rule (the “Final Rule”). The timing for publication of the final rule was widely perceived as coordinated with the President’s State of the Union address, and in his March 7, 2024 address, President Joe Biden did briefly mention the Final Rule, citing the reduction of credit card late fees to $8 and adding “I’m saving American families $20 billion a year with all the junk fees I’m eliminating.”… Continue Reading
After targeting credit card late fees in its proposed rule, the CFPB has set its sights on further attacking credit card pricing through interest rates. The CFPB published a blog late last month stating that credit card interest rate margins are at an all-time high, with an average 14.3% margin in 2023 compared to 9.6% margin in 2013, and have fueled the profitability of revolving balances.… Continue Reading
In a new data spotlight issued last week, the Consumer Financial Protection Bureau (“CFPB”) found that interest rates charged on credit cards issued by large banks are higher than interest rates charged on credit cards issued by smaller banks and credit unions. In a press release about the report, CFPB Director Rohit Chopra states that “the CFPB will be accelerating its efforts to ensure that consumers can access better rates that can save families billions of dollars per year.”… Continue Reading
On April 17, the Consumer Bankers Association (CBA) issued a news release responding to the CFPB’s proposal to lower the credit card late fee safe harbor amount to $8. The CFPB claims that, even though Congress banned excessive credit card late fees, credit card companies have exploited a regulatory loophole “to escape scrutiny for charging an otherwise illegal junk fee.” … Continue Reading
Nearly two months after it was issued on February 1, the CFPB’s proposal to make significant changes to the Regulation Z rules for credit card late fees was published in today’s Federal Register. The changes include a substantial reduction in the safe harbor amounts and the elimination of the annual inflation adjustments. … Continue Reading
The CFPB has issued a proposal that would make significant changes to the current rules for credit card late fees, including substantially reducing the safe harbor late fee amounts that card issuers can charge and eliminating annual inflation adjustments. After reviewing the legislative and regulatory history of the current rules, we look at the CFPB’s flawed rationale for reducing the safe harbor to a flat $8 for all late payments, identify the serious flaws in its economic analysis of the likely effects of the reduction, and discuss how the proposal relates to the Biden Administration’s junk fees initiative. … Continue Reading
