CFPB Launching Fresh Look At Credit Card Penalty Fees
By CU Today Staff —
WASHINGTON— The CFPB is preparing to reopen its examination of credit card late fees, signaling the agency is considering new regulatory action on a consumer affordability issue that has remained unresolved since a court blocked the Biden Administration's effort to cap most late fees at $8.
According to Law360, the CFPB is preparing a request for information (RFI) on credit card late fees and late payments that is currently under White House regulatory review.
The forthcoming RFI appeared Monday on the federal government's regulatory agenda, indicating the CFPB has sent the proposal to the Office of Information and Regulatory Affairs for review. While no draft has been released, the filing suggests the Bureau is seeking public input before deciding whether to pursue additional rulemaking. The action comes after the Bureau's 2024 late-fee rule—which would have reduced the safe-harbor amount for large card issuers to $8 from levels that had generally been around $30 or more—was stayed during litigation brought by banking and business groups.
The Biden-era rule applied to credit card issuers with more than one million open accounts and was intended to curb what the CFPB called excessive penalty fees. Industry groups argued the Bureau exceeded its authority under the Credit CARD Act of 2009 and warned the cap would lead to higher interest rates, reduced rewards programs and tighter credit availability. A federal judge ultimately blocked the rule from taking effect, and the CFPB later withdrew its defense of the regulation, leaving the $8 cap effectively dead.
Law360 reported the new request for information suggests the CFPB is taking a fresh approach by gathering information before determining whether further regulatory action is warranted. The regulatory filing lists no statutory deadline and identifies the effort as a prerule action under the Dodd–Frank Wall Street Reform and Consumer Protection Act, providing an early indication that the Bureau is again evaluating whether current credit card late fee practices warrant changes.
Originally reported by CU Today.