Credit Card Late Fee Case Moved Again to Washington From Texas

A banking group challenge to the Consumer Financial Protection Bureau’s credit card late fee cap will be sent to Washington, D.C., for a second time.

None of the banks or credit companies affected by the CFPB’s rule, which caps late fees at $8, are based in the Fort Worth Division of the Northern District of Texas, while most of the attorneys working on the case are located in the nation’s capital, Judge Mark Pittman wrote in a Tuesday order to move the case.

The CFPB’s rule has been bogged down in fights over venue, judicial ethics, and the bureau’s authority ever since it was finalized March 5. The move back to Washington marks the latest twist in the saga over the cap, which industry groups say will cost them billions of dollars in revenue.

Industry plaintiffs—the US Chamber of Commerce, the American Bankers Association, the Consumer Bankers Association, and three Texas industry associations—filed a suit two days later in the US District Court for the Northern District of Texas seeking to block the rule.

Pittman on March 28 sent the case to Washington, but the US Court of Appeals for the Fifth Circuit returned it to Texas, finding the district judge didn’t have the authority to transfer the case because he hadn’t ruled on the plaintiffs’ motion for a preliminary injunction to pause the rule.

Pittman on May 10 granted the industry plaintiffs’ request to put the rule on hold while the US Supreme Court weighed whether the CFPB’s independent funding through the Federal Reserve was constitutional. The high court then upheld the CFPB’s funding stream, and the Fifth Circuit closed out the credit card late fee challenge at the appellate level, clearing the way for Pittman to rule on venue once again.

“Given the Fifth Circuit’s admonition that this Court had previously not acted swiftly enough in handling this case, the Court determines it is in the best interest of the Parties and justice to transfer the case at the earliest possible juncture,” Pittman, a Trump-appointed judge, wrote in his Tuesday opinion.

“This case did not belong in the Northern District of Texas and certainly not in the Fort Worth Division on March 7, it did not when this Court transferred it on March 28, and it does not today—two months later,” he said.

The CFPB and the US Chamber of Commerce didn’t immediately respond to requests for comment about the order.

The CFPB’s rule, part of the Biden administration’s campaign against so-called junk fees, has the potential to cost banks $10 billion of their annual $14 billion in credit card late fee revenue, according to Bloomberg Intelligence.

The case is US Chamber of Commerce v. CFPB, N.D. Tex., No. 4:24-cv-00213, 5/28/24.