WASHINGTON (Legal Newsline) - The U.S. Chamber of Commerce has sued a federal agency over its controversial rule restricting the size of late fees that credit card companies can charge.
A lawsuit was filed March 7 in Texas federal court against the Consumer Financial Protection Bureau (CFPB) and its Director, Rohit Chopra, by a group of plaintiffs. The case has since been transferred to D.C. federal court.
The plaintiffs are challenging new rulemaking by the CFPB on credit card late fees. They argue that this rule slashes by 75% the safe harbor amount set for credit card late fees by the Federal Reserve Board of Governors.
The plaintiffs claim that this move upends more than a decade of regulations and is unlawful. They also note it implements a promise made by President Joe Biden during his State of the Union address before the public-comment period on the rule had even begun.
They further allege that the CFPB's promulgation violated the Appropriations Clause and is a sharp break from both the statute and more than ten years of regulations interpreting it. They argue that these actions will ultimately harm consumers which CFPB is supposed to protect.
Rulemaking has become a hot topic with the CFPB, as a House committee recently held a hearing to discuss late fees from banks and so-called junk fees.
The credit card late fees fall under the latter, the suit says.
"The concept of attaching consequences to the failure to pay an obligation is ubiquitous in our legal system," the suit says.
"Credit card obligations are no different: Congress has recognized that credit card late fees appropriately serve three commonsense, important purposes: deterring late payments, accounting for cardholder conduct, and compensating credit card issuers for the costs they incur when payments are late."
In addition to the U.S. Chamber, other plaintiffs are the Fort Worth Chamber of Commerce, the Longview Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and the Texas Association of Business.