A Texas district court Friday issued a preliminary injunction to stop the CFPB’s credit card late fees rule from taking effect this week.
The CFPB finalized the rule in March, capping credit card late fees at $8 and eliminating the automatic annual inflation adjustment for the threshold. The rule applies to issuers with more than one million open accounts.
The judge sided with financial institutions who filed a lawsuit against the rule, holding that the CFPB’s funding mechanism is unconstitutional and invalidates the rulemaking.
The U.S. Supreme Court has heard arguments in another lawsuit directly challenging the bureau’s funding structure and is expected to issue a decision by the end of June. The Court’s decision could impact this lawsuit regarding the credit card late fees rule and several other pending lawsuits.
America’s Credit Unions President/CEO Jim Nussle has called the credit card late fees final rule “misguided” and argued it “clearly demonstrates a misunderstanding of how credit cards work.” The organization has supported congressional resolutions to revoke the rule.
In addition to this lawsuit, a group of lawmakers led by Rep. Alex Mooney, R-W.Va., Friday sent a letter to CFPB Director Rohit Chopra regarding the CFPB’s finances. The lawmakers are concerned that the CFPB has continued to request record transfers from the Federal Reserve while its unobligated balances continue to grow, exceeding the statutory funding cap set out by Congress the past two years.
America’s Credit Unions will continue to advocate for increased accountability and transparency at the bureau.
