The US District Judge refused to dissolve a ruling they issued in May 2024 that forbade the policy, which was challenged by both businesses and banking groups. The regulation limited credit card late fees to USD 8 and was part of Democratic President Joe Biden’s administration’s broader restriction on junk fees. In addition, the law was set to prevent card issuers with over one million open accounts from charging more than USD 8 for late fees without proving the necessity of higher fees to cover their costs.
When requesting the judge to reconsider the injunction, the CFPB mentioned that the action rested on an appeals court’s ruling asserting the agency’s funding structure unconstitutional. However, this decision was overturned by the US Supreme Court. Despite this, the judge agreed with the US Chamber of Commerce and the American Bankers Association that took legal action to challenge the regulation, with the rule still facing the possibility of being blocked on other grounds.
The Texas judge stated that the regulation did not fall in line with the Credit Card Accountability and Disclosure Act, a 2009 US law designed to safeguard consumers from unfair practices by card issuers. The regulation focused on excessive fees imposed by companies, however, it enabled card issuers to put in place penalty fees when a customer breached a credit card agreement, such as failing to make an on-time payment.
Furthermore, recently, the judge also declined the CFPB’s request to transfer the case out of Texas to Washington. Representatives from CFPB commented on the judge’s ruling, stating that it enables large banks to extract nearly USD 27 million in late fees from American individuals every day. Additionally, the agency approximates that without imposing the rule, US residents would spend over USD 56 billion in credit card fees until 2029. At the time of writing, the Chamber did not provide a response to the ruling.
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