A US judge has struck down a Consumer Financial Protection Bureau (CFPB) rule that capped credit card late fees at $8. Texas-based US District Judge Mark Pittman approved a joint request from the CFPB and a coalition of business and banking organizations to eliminate the rule, as reported by Reuters.
Judge Pittman, who was appointed by Donald Trump, ruled that the fee cap violated the Credit Card Accountability and Disclosure Act of 2009 by preventing credit card issuers from charging fees that are “reasonable and proportional to violations.” The rule applied to issuers with over a million open accounts, unless they could demonstrate that higher fees were needed to cover costs.
When the CFPB introduced this rule last year, it claimed it would save Americans over $10 billion in late fees annually by reducing the standard fee from $32 to $8. However, since Trump dismissed CFPB director Rohit Chopra shortly after taking office, the agency has been working to scale back its activities and reverse prior decisions under acting Director Russell Vought.
Recently, the CFPB also abandoned an interpretive rule that classified pay-in-four buy now, pay later (BNPL) lenders in the same category as credit cards. Additionally, it has withdrawn several lawsuits, including cases against JPMorgan Chase, Bank of America, and Wells Fargo regarding fraud in the Zelle P2P payments network. Furthermore, a proposed rule to extend the agency’s oversight to technology giants like Apple, Google, and X, which offer digital payment applications and wallets, was recently rejected by both the Senate and House of Representatives.