Industry win: Judge vacates CFPB credit card late fee rule

A U.S. District Court judge approved the CFPB's settlement in a lawsuit where it agreed to vacate its credit card late fees final rule “for failure to allow card issuers to charge penalty fees reasonable and proportional to violations.” The Tuesday decision returns the regulation to the previous safe harbor framework. America’s Credit Unions President/CEO Jim Nussle applauded the CFPB’s agreement to settle the lawsuit challenging the rule and vacate it. 

"As trusted financial partners, credit unions offer consumers affordable and safe credit card programs. The credit card late fees rule would have upended that system and increased costs for all cardholding members, while also decreasing the availability of credit for those who need access the most. Credit unions were clear with their concerns about the negative impact of the CFPB's credit card late fees rule, and we appreciate the CFPB agreeing to settle the lawsuit challenging the rule and vacate it,” said Nussle in a statement. “America's Credit Unions will continue to advocate for policies that allow credit unions to support the financial well-being of their 142 million members." 

The previous safe harbor amounts permitted a credit union to charge up to $30 for the first late payment and $41 for any subsequent late payment which occurs within one of the next six billing cycles. Those amounts have been adjusted annually to reflect inflation and other factors. America’s Credit Unions will monitor the bureau to see if it revises the previous thresholds, as permitted under the CARD Act.

America’s Credit Unions’ legacy organizations were vocal in opposition of the rule. Just last week, America’s Credit Unions President/CEO Jim Nussle underscored how the rule would have dismantled consumers’ protections and limited access to credit in a letter to Sen. Tim Scott, R-S.C., and Rep. Andy Barr, R-Ky., who introduced  joint resolutions to void the final rule.