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A federal judge has officially issued a preliminary injunction to halt a rule capping credit card late fees.
The new regulation, established by the Consumer Financial Protection Bureau (CFPB) and set to limit fees to $8, was stopped in its tracks by US District Judge Mark Pittman in Fort Worth, Texas. This decision prevents the rule from being implemented as planned next week.
The injunction, sought by several groups, including the US Chamber of Commerce and the American Bankers Association, supports business interests. Judge Pittman referenced a 2022 decision by the 5th US Circuit Court of Appeals, which questioned the constitutionality of the CFPB’s funding structure. Pittman noted, “Consequently, any regulations promulgated under that regime are likely unconstitutional as well.”
The halted rule had garnered support from President Joe Biden and aimed to reduce what the CFPB termed “excessive” late fees. These fees reportedly accumulate to over $14 billion annually, with typical charges of around $32. According to the White House, the rule intended to protect consumers by limiting fees charged by card issuers with more than 1 million accounts unless the issuers’ costs could justify higher fees.
Maria Monaghan, representing the US Chamber of Commerce Litigation Center, described the judge’s decision as “a major win for responsible consumers and businesses.” Meanwhile, a CFPB spokesperson emphasized the negative impact of the delay, estimating that “consumers will shoulder $800 million in late fees every month that the rule is delayed.”
