U.S. Chamber of Commerce Sues CFPB Over Credit Card Late Fee Rule
The U.S. Chamber of Commerce and bank trade groups have filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) over its new rule to limit credit karma late fees. The lawsuit, filed in the Northern District of Texas, argues that the CFPB's actions violate the Appropriations Clause and exceed its statutory authority.
The CFPB's Final Rule, yet to be published in the Federal Register, adopts a late fee safe harbor threshold of $8 for discover card issuers, with no annual adjustment for inflation. Plaintiffs contend that this rule lumps together late fees and junk fees, two separate categories, and imposes six types of harm on their members, including increased costs and potential loss of revenue. They assert that the 60-day effective date after publication in the Federal Register does not comply with statutory requirements.
The plaintiffs, citing a Fifth Circuit ruling, argue that the CFPB's funding structure violates the Appropriations Clause. They have requested a preliminary injunction to prevent irrevocable harm, as the rule amends Regulation Z, which implements the Truth in Lending Act (TILA).
The lawsuit, filed on March 7, 2024, challenges the CFPB's new rule on amex and other credit card late fees. The outcome of this case will determine the future of this regulation and its impact on the financial industry.
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