A federal judge in Texas on Friday denied a request by the Consumer Financial Protection Bureau (CFPB) to lift an injunction blocking a new U.S. regulation capping credit card late fees at $8. The rule, part of the Biden administration's broader push to eliminate "junk fees," has faced opposition from business and banking groups. U.S. District Judge Mark Pittman in Fort Worth upheld a May injunction that prevents the regulation from taking effect. The policy would limit card issuers with more than one million open accounts to charging no more than $8 for late fees, unless they can demonstrate that higher fees are necessary to cover their costs, reports Reuters.
In asking the judge to revisit the injunction, the CFPB said the action had rested entirely on an appeals court's ruling declaring the agency's funding structure unconstitutional - a decision subsequently overturned by the U.S. Supreme Court.
But Pittman agreed with groups including the U.S. Chamber of Commerce and the American Bankers Association that had sued to challenge the regulation that the rule could still be blocked on other grounds.
Pittman, who was appointed by Republican President-elect Donald Trump during his first term, said the rule violated the Credit Card Accountability and Disclosure Act, a 2009 U.S. law designed to protect consumers from unfair practices by card issuers.
The law regulated excessive fees but allowed card issuers to impose "penalty" fees when a customer violated a credit card agreement, including by failing to make an on-time payment, Pittman said.
"Congress assigned the CFPB as an umpire to call balls and strikes on the reasonableness and proportionality of penalty fees," Pittman said, using a baseball analogy.
But by preventing card issuers from actually imposing penalty fees, the CFPB impermissibly "established a strike-zone only large enough for pitches right down the middle," Pittman wrote.
The judge also rejected the CFPB's request to move the case from Texas to Washington, D.C. A CFPB spokesperson criticized the ruling, stating that it would allow large banks to collect $27 million in excessive late fees from American families every day. The agency estimates that, without the regulation, consumers will spend over $56 billion on credit card fees over the next five years.
Bd-pratidin English/ Jisan
