A federal judge in Texas has refused to reinstate a new regulation capping credit card late fees at $8 after corporate lobbyists and banks challenged the policy as unconstitutional.
The regulation prevents card issuers with more than 1 million users from charging late fees of more than $8 unless they can prove to the Consumer Financial Protection Bureau that they need the funds to cover the costs. It becomes like this. U.S. District Judge Mark Pittman in Fort Worth issued an injunction in May preventing the rule from taking effect. On Friday, Pittman denied the CFPB's request to lift the order.
The policy will save cash-strapped Americans $800 million a month in late fees. washington post. However, when this cap was proposed, U.S. businesses and businesses argued that hefty late fees were necessary to deter late payments and avoid “increasing costs” for credit card users. Many groups, including the chamber, moved quickly to sue the government.
Pittman, who was appointed during President-elect Donald Trump's first term, said the rule is a 2009 law aimed at protecting consumers from unfair practices by credit card issuers, Reuters reported. It said it was a violation of the Liability and Disclosure Act.
“This ruling has major implications for responsible consumers who pay their credit card bills on time and for businesses that want to provide affordable credit,” Maria Monahan, an attorney with the U.S. Chamber of Commerce Litigation Center, said in a statement. It will be a victory.”
The late fee cap policy is part of the Biden administration's crackdown on “junk fees,” which would require resorts and music services to disclose all fees upfront and offer ticket refunds in the event of significant delays. Other regulations included requiring all businesses to: Canceling a service is as easy as registering.
The CFPB estimates that without this regulation, Americans would spend more than $56 billion on credit card fees over the next five years. Reuters.
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