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A US federal judge has thrown out a Biden-era rule capping late credit card payment fees at $8 following a challenge by the Trump administration and a coalition of business groups.
District Judge Mark Pittman ruled that the Consumer Financial Protection Bureau’s (CFPB) cap breached the Credit Card Accountability and Disclosure Act 2009 on April 15.
The cap had put a ceiling on late penalty fees card issuers could charge unless they could show they were necessary to meet their costs.
But a coalition of business groups, comprising the US Chamber of Commerce, American Bankers Association, Forth Chamber of Commerce, Longview Chamber of Commerce, Consumer Bankers Association and Texas Association of Business, had argued that it punished responsible credit card users who paid their bills on time.
In a statement, the group said: “This is a win for consumers and common sense. 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. 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.”
As covered by Vixio, the CFPB introduced the cap in March 2024, but business groups, mindful of how much it would cost them in lost revenue, quickly won an injunction that stopped it from taking effect.
Regulatory uncertainty
The reversal of the late fee cap is the latest example of the Trump administration acting against rules introduced under President Biden that it says impede business.
Earlier in April, Republican lawmakers on the House Financial Services Committee issued a flurry of letters to financial authorities outlining the Biden-era regulations they want rescinded.
The future of the CFPB itself remains uncertain, with the nominee for director, Jonathan McKernan, still awaiting Senate confirmation.
It apparently remains in the crosshairs of Republican lawmakers, even though the Trump administration insists it has no plans to close it down.
The agency has already been on an interesting journey under the new administration, with two interim directors so far, its offices being temporarily shuttered and the homepage of its website being taken down.
More recently, a policy agenda has started to emerge, with the CFPB dropping a series of enforcement actions, including a major case against Capital One, which the bureau had accused of “cheating” customers out of more than $2bn in interest payments.
It also withdrew a lawsuit against peer-to-peer platform Zelle and its three largest owner banks, which it had previously accused of allowing fraud to “fester”, resulting in more than $870m in consumer losses.
These steps, along with the latest court decision, suggest a direction of travel for the CFPB.
As time goes on its agenda will presumably become clearer, but a rolling back of Biden-era regulation is certainly in full swing.
