Judge Overturns CFPB's $8 Credit Card Late Fee Cap

A federal judge in Texas has vacated a Consumer Financial Protection Bureau (CFPB) rule that capped credit card late fees at $8, following a legal challenge by banking and business groups. The rule, introduced during the Biden administration as part of an effort to reduce 'junk fees,' was deemed by U.S. District Judge Mark Pittman to violate the Credit Card Accountability and Disclosure Act of 2009. The CFPB and the opposing groups agreed it was illegal, arguing it restricted issuers from charging fees that are 'reasonable and proportional' to violations. The plaintiffs claimed the rule ignored statutory factors like deterrence and consumer behavior, and was based on flawed data. Business groups welcomed the decision, suggesting the rule would have had negative impacts on consumers who pay on time, by potentially increasing costs and reducing credit access. The ruling is part of a broader trend of the Trump administration reversing Biden-era regulations perceived as unfavorable to business interests.