DALLAS–In what could be a significant move in a case involving its credit card late fee rule, the Consumer Financial Protection Bureau has filed a status report indicating it is working to find a resolution.
The case involves the CFPB’s final rule issued on March 5, 2024 that seeks to reduce the safe harbor for late fees from $30 for the first missed payment and $41 for subsequent late payments (within six billing cycles) to $8, and prohibited adjustments for inflation. The case has been batted back and forth between courts in Washington and Texas.
The plaintiffs, who include the Fort Worth Chamber of Commerce, are challenging this the CFPB’s rule under the Administrative Procedure Act, arguing that it exceeded the CFPB’s statutory authority under the Credit Card Accountability and Disclosure Act (CARD Act). Credit unions, which are not a party in the litigation, have also opposed the CFPB rule.
How Do You Plan to Proceed?
In February, the judge ordered the CFPB to explain how it plans to proceed with the case, with the U.S. District Court for the Northern District of Texas issuing an order that acknowledged the Trump administration to cease “all supervision and examination activity” and “all stakeholder engagement.”
The court then ordered the CFPB to file a status report within 30 days, explaining how it plans to move forward.
In its status report, CFPB Acting Director Russell Vought said the Bureau is reviewing its positions on a number of agency actions.
“The Bureau respects this Court’s ruling granting a preliminary injunction and considering plaintiffs’ likelihood of success on the merits of their claims,” the CFPB said in the report. “Counsel for the Bureau have begun discussing with Plaintiffs’ counsel potential ways to resolve this case. Based on those conversations, the Bureau is optimistic that an agreement can be reached within 30 days, but the parties require additional time to see if an agreed resolution is feasible.”
The CFPB is requesting at the court stay all pending deadlines in the litigation and instruct the parties to file a joint status report within 30 days if no resolution is reached before then.
Credit Union Attorney Responds
In a statement on LinkedIn, Brandy Bruyere, regulatory compliance attorney and partner at Honigman, LLP in Washington, said, “An amicable resolution here could include rulemaking to delay the rule to give the CFPB time to reconsider the rule and withdraw the $8 fee cap, perhaps restoring to the $41 or so cap tracked to inflation that was in place previously.”