Consumer Finance Insights
March 15, 2024

Chamber of Commerce Sues CFPB To Eliminate or Enjoin $8 Late Fee Cap

Last week, the U.S. Chamber of Commerce (Chamber) joined five other trade associations to sue the Consumer Financial Protection Bureau (CFPB) and its director Rohit Chopra in Texas Federal District Court, seeking a court order declaring a recent CFPB rule arbitrary and capricious, vacating the rule, and enjoining its enforcement.

In a previous post, we reported that on March 5, 2023, the CFPB issued a rule (Final Rule) setting an $8 threshold on late fees that larger credit card issuers (those with over one million open credit accounts) may charge.  The Final Rule, published in the Federal Register on March 15, 2024, will become effective 60 days later unless enjoined or vacated.

The Chamber and its co-plaintiffs filed their complaint on March 7, 2023, just two days after the CFPB’s Final Rule announcement.

In a press release, the Chamber stated that the CFPB not only exceeded its statutory authority in promulgating the Final Rule, but that it did so by relying on “secret data,” and data collected for an unrelated purpose.  Specifically, the complaint alleges that the CFPB relied on analysis of non-public survey data collected to aid in creating stress-test models.  The data allegedly came from surveys sent to financial holding companies with at least $100 billion in assets which asked respondents the following:  “Report costs incurred to collect problem credits.  Include the total collection cost for delinquent, recovery, and bankrupt accounts.”  However, the complaint continues, the data was non-public and the CFPB failed to provide sufficient technical detail of its analyses to allow for public scrutiny.  Further, the CFPB allegedly provided “no additional guidance on what should be excluded or included” in survey responses which were “a single totaled number for each category” and which, as a result, failed to provide the CFPB information sufficient to “understand whether the factors supporting those totaled numbers are consistent between banks, whether different banks include different factors in different categories, or exactly what costs a bank is including and not including in its numbers.”

The complaint also alleges the Final Rule “may force issuers to raise minimum payments, annual fees, or APRs; lower credit limits; or offer fewer rewards.”

In the alternative, the lawsuit demands a declaration that the cost-analysis provisions of the Final Rule are invalid, or that the effective date of the rule be extended.

The plaintiffs filed a motion for preliminary injunction the same day they commenced the action.  The CFPB opposed the motion on March 12, 2024, alleging in part that the plaintiff was engaged in forum shopping.  On March 15, 2024, the assigned judge, Judge Reed O’Connor, recused himself without providing a specific reason and was replaced by Judge Mark. T. Pittman.

The Chamber of Commerce, according to its website, is the world’s largest business organization, an advocacy group that promotes business growth and success in the United States.  Its co-plaintiffs in the lawsuit are the Fort Worth Chamber of Commerce, the Longview Chamber of Commerce, of Longview Texas, the American Bankers Association, which advocates for the banking industry generally, the Consumer Bankers Association, which focuses its advocacy exclusively on retail banking, and the Texas Association of Business.

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