The credit card industry, led by the U.S. Chamber of Commerce, has filed a lawsuit in federal court against the Consumer Financial Protection Bureau to block a law promising to save Americans billions of dollars in credit card late fees.
The new rule, which was supposed to go into effect on Tuesday, would limit late fees to just $8 per incident, compared to the previous average of $32. The effort was part of President Joe Biden’s attempt to curb what he called “junk fees.”
It’s expected that a judge in the Northern District of Texas will determine by Friday evening if the industry’s request for a freeze will be granted. The industry claims the reduced late fee allowances passes the costs off to the consumers who pay their bills on time and makes it more likely for the users who don’t pay to fall behind.
Some card issuers, such as Synchrony and Capital One, have said they would need to offset the revenue lost if the regulation takes effect, which could be done by adding new fees or changing who’s approved for lending. “Some of these mitigating actions have already been implemented and are underway,” said Capital One CEO Richard Fairbank during the company’s first-quarter earnings call. “We are planning on additional actions once we learn more about where the litigation settles out.”
