CFPB Resolves Credit Card Late Fee Case, Asks Judge to Toss Rule

The Consumer Financial Protection Bureau has opted to abandon a rule imposing an $8 limit on credit card late fees, rather than defend against banking industry claims filed during the Biden administration, according to a consent judgment motion filed Monday.

The agency, under current acting director Russell Vought, and industry groups jointly seek dismissal of the bulk of claims and a consent judgment on industry groups’ contention that repealing a safe harbor for late fees violated a law allowing issuers to charge penalties.

Groups including the US Chamber of Commerce and American Bankers Association agreed with the CFPB that the Biden-era change violated the 2009 CARD Act, requesting that the US District Court for the Northern District of Texas vacate the late fee rule.

The agency finalized its late fee cap in March 2024 as part of a Biden administration initiative to crack down on “junk fees,” prompting the industry groups’ suit days later. The suit argued that the CFPB exceeded its authority and relied on faulty economic analysis.

Judge Mark T. Pittman attempted to transfer the case to US District Court for the District of Columbia twice after he determined that neither the agency nor the banks affected by the rule were within his jurisdiction. The US Court of Appeals for the Fifth Circuit sent the case back to his court both times, where he denied a CFPB bid to dismiss all claims in December.

In a status report last month, the agency expressed optimism that the parties could reach an agreement and requested that Pittman stay all pending deadlines while the parties resolved the case.

The consent judgment request acknowledged the industry groups’ likely success on the merits of their case, noting that the agency should have factored in deterrence of late payments when calculating the lower fee cap.

Workers at the CFPB lost some protections against the Trump administration’s planned reductions in force on Friday, when an appeal panel partially stayed an order halting mass firings at the agency. Under the narrowed injunction, CFPB leaders can fire employees or subject them to a reduction in force after an “individualized” or “particularized” assessment, the US Court of Appeals for the District of Columbia Circuit panel said.

Paul Hastings LLP represents the banking industry plaintiffs.

The case is Chamber of Com. of U.S. v. CFPB, N.D. Tex., No. 4:24-cv-00213, 4/14/25