The US Chamber of Commerce has initiated a lawsuit against the Consumer Financial Protection Bureau (CFPB), aiming to prevent the agency from enforcing a new rule that seeks to limit late credit card fees.
Recently, the CFPB finalized a regulation designed to reduce excessive late fees by addressing a loophole that has been exploited by major card issuers. The CFPB estimates this change could save American families over $10 billion in annual late fees by lowering the average fee from $32 to $8. This translates to an average savings of $220 per year for the more than 45 million individuals who incur late fees.
In its lawsuit, the US Chamber of Commerce contends that the CFPB’s new rule penalizes responsible credit card users who pay their bills on time. The Chamber also asserts that the CFPB’s decision was based on secret data provided by banks for unrelated purposes.
The American Bankers Association is also named as a co-plaintiff in the court filings. Neil Bradley, chief policy officer of the US Chamber, stated, “American consumers benefit from a variety of credit cards that best suit their needs, and a large majority of credit card users understand the requirement to pay their bills on time, as well as the costs associated with late payments. By significantly restricting late fees, the CFPB is discouraging responsible credit use and imposing higher costs on consumers, while limiting choices in credit card options and benefits.”
Bradley further noted that the expenses incurred by banks due to the reduction of late fees would ultimately be passed on to all credit card users, including those who have never missed a payment. He concluded by asserting that the “CFPB is acting outside its authority,” and the Chamber’s lawsuit aims to protect American cardholders who pay on time and appreciate the diverse benefits offered by financial institutions.