Texas Judge Overturns CFPB's Credit Card Late Fee Cap

A Texas federal court has vacated a Consumer Financial Protection Bureau (CFPB) rule that capped credit card late fees at $8, marking a significant win for banking and business groups. U.S. District Judge Mark Pittman ruled that the cap violated the Credit Card Accountability and Disclosure Act by preventing issuers from charging fees that are 'reasonable and proportional to violations.' The CFPB, under the Biden administration, had implemented the cap as part of a broader effort to reduce consumer 'junk fees.' However, the ruling was supported by a coalition of business groups, including the U.S. Chamber of Commerce, which argued that the cap would lead to higher costs for consumers who pay their bills on time. This decision aligns with ongoing efforts by the Trump administration to reverse regulatory measures seen as detrimental to business. The late fee cap, originally set in March 2024, was intended to protect consumers from excessive charges but has been deemed illegal by the court.