The Trump administration has taken legal action to overturn a regulation that limits credit card late fees to $8. On Monday, the U.S. Consumer Financial Protection Bureau (CFPB), alongside business and banking groups, filed a motion in federal court requesting that U.S. District Judge Mark Pittman in Fort Worth, Texas, issue a final ruling to rescind the rule.
This rule, part of President Joe Biden’s broader initiative against “junk fees,” faced opposition from industry groups that argued it was unlawful. Despite the regulation’s aim to cap late fees, Trump’s administration has supported these groups, claiming the rule is an overreach.
In a prior ruling, Judge Pittman, a Trump appointee, had blocked the CFPB from implementing the rule. The case revolves around the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, a law designed to protect consumers from unfair practices by credit card issuers. The legislation allows penalty fees, but only if they are deemed necessary to cover actual costs incurred by the issuer.
The regulation would have limited late fees to $8 for credit card issuers with more than 1 million open accounts, unless they could justify higher charges. Pittman, in December, ruled that the rule violated the 2009 law, noting that it improperly restricted penalty fees for late payments.
The CFPB, a consumer finance watchdog created after the 2008 financial crisis, has long been criticized by Republicans for what they see as an overreach of its authority. The agency’s efforts to crack down on what it calls unfair financial practices have led to ongoing legal battles, and the Trump administration has sought to reduce its influence. However, a federal appeals court ruled last Friday that while the administration could lay off workers at the CFPB, it could not fully dismantle the agency.
As the legal challenges continue, both the CFPB and the U.S. Chamber of Commerce, which led the lawsuit against the regulation, have not yet responded to requests for comment.
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