FORT WORTH, Texas — A federal judge in Texas on Friday denied the Consumer Financial Protection Bureau's request to lift an order blocking a new regulation capping credit card late fees at $8, but the policy does not require companies to Organizations and banking organizations were objecting.
Fort Worth District Judge Mark Pittman refused to rescind a May injunction barring the rule, part of a broader crackdown on “junk fees” by Democratic President Joe Biden's administration, from taking effect.
The regulation would prevent card issuers with more than 1 million open accounts from charging late fees of more than $8 unless they can prove the higher fees are necessary to cover their costs.
The Consumer Financial Protection Bureau asked the judge to reconsider the injunction, saying its lawsuit was based solely on an appeals court ruling that declared the agency's funding structure unconstitutional, a ruling that later Overturned by the Supreme Court.
But Pittman agreed with groups that challenged the regulation, including the Chamber of Commerce and the American Bankers Association, that the regulation could be blocked for other reasons.
Pittman, who was appointed during Republican President-elect Donald Trump's first term, said the rule was part of the Credit Card Accountability Act, a 2009 law aimed at protecting consumers from unfair practices by card issuers. He said it was a violation of disclosure laws.
Pittman said the law regulates excessive fees, but also prevents card issuers from imposing “penalties” if a customer violates a credit card contract, such as failing to pay on time. It is said that he acknowledged it.
“Congress appointed (the Consumer Financial Protection Bureau) the umpire to call balls and strikes on the reasonableness and proportionality of penalties,” Pittman said, using a baseball analogy.
But by blocking card issuers from actually imposing penalties, the Consumer Financial Protection Bureau “created a strike zone only wide enough to pitch right in the middle,” Pittman wrote. .
The judge also rejected the Consumer Financial Protection Bureau's latest request to move the case from Texas to Washington state.
A spokesperson for the Consumer Financial Protection Bureau said the judge's ruling “allows major banks to collect an exorbitant $27 million in late fees from American families every day.”
The agency estimates that without the rule, people would spend more than $56 billion on credit card fees over the next five years.
There was no immediate comment from the chamber.
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