A federal court has vacated the Consumer Financial Protection Bureau’s rule on credit card late fees a day after the American Bankers Association and other plaintiffs reached an agreement with the bureau to end a lawsuit over the rule.
ABA last year joined the U.S. Chamber of Commerce and other plaintiffs in challenging the rule in U.S. District Court for Northern Texas, arguing the bureau exceeded its statutory authority. Under the terms of the settlement announced yesterday, the CFPB acknowledged it exceeded its authority under the Credit Card Accountability Responsibility and Disclosure Act, and that the late fee rule violates the Administrative Procedure Act. The CFPB asked the court to vacate the rule, which it did today.
In a joint statement, ABA and the other plaintiffs welcomed the court’s decision.
“If the CFPB’s rule had gone into effect, it would have resulted in more late payments, lower credit scores, higher interest rates and reduced credit access for those who need it most,” they said. “It would have also penalized the millions of Americans who pay their credit card bills on time and reduced important incentives for consumers to manage their finances. We appreciate the CFPB’s recognition that the rule violated the law, and the bureau’s willingness to resolve our legal challenge.”
