CFPB Releases Rule Proposal on Credit Card Late Fees

credit card interest ratesThe bureau started its push for regulating fees in 2022 and now seeks to significantly decrease the ability to recoup fees through a rulemaking.

02/07/2023 3:05 P.M.

3 minute read

The Consumer Financial Protection Bureau’s latest proposed rule would update regulations implementing the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).

The bureau sought comments on credit card fees through an advance notice of proposed rulemaking last summer and ACA International responded with an overview of the use of fees in the debt collection industry.

In its request for information for this proposed rule, the CFPB notes that in 2017, “after observing many abuses,” it issued a Compliance Bulletin on unfair, deceptive, and abusive acts or practices related to fees for making payments over the phone, and potential violations of the Fair Debt Collection Practices Act, ACA previously reported.

Now, the CFPB proposes to “lower the immunity provision for late fees to $8 for a missed payment as well as end the automatic annual inflation adjustment. The proposed rule would also ban late fee amounts above 25% of the consumer’s required payment.”

The CFPB is collecting comments on the proposal, which must be received on or before April 3, 2023, or within 30 days after publication of the Notice of Proposed Rulemaking in the Federal Register, whichever is later.

Comments are also open on other possible updates to CARD Act regulations, such as whether they should apply to all credit card penalty fees, eliminating the immunity provision, a courtesy period for consumers before late fees are applied, and whether credit card providers should have to provide an autopay option if they want to also use the immunity provision, according to the CFPB.

Members of Congress, particularly Republican leaders on the House Financial Services Committee, weighed in on the CFPB’s monitoring of fee last year.

Chair of the committee, U.S. Rep. Patrick McHenry, R-N.C., said in response to the latest proposed rule that it “would limit consumer options, benefits, and punish borrowers in good standing,” according to a news release.

ACA’s Take

ACA expected the proposed rule after the request for information (RFI) was released in 2022 and is reviewing it for possible comments.

Congress also noted in a letter that “the CFPB broadly groups all fees associated with consumer products and services as ‘junk fees’ and does not provide any legal definition of the term or any statutory authority to define such a term.”

ACA strongly agrees with this concern. Moreover, we are disappointed that it has been a trend in recent months for the CFPB to use pejorative terms when describing not only the debt collection industry, but also most participants in the financial services industry.

If you have feedback to share as ACA reviews this request for comment, contact our advocacy team at [email protected].

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.

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If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.


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