Bank Groups Sue CFPB Over New Credit Card Late Fee Rule

The lawsuit claims the rule, which would lower late fees to $8, is arbitrary and could harm consumers.

The U.S. Chamber of Commerce and five bank trade groups have filed a lawsuit against the CFPB to stop a rule that would reduce credit card late fees to $8, claiming the rule is arbitrary and exceeds the bureau's authority.
The rule, aimed at slashing credit card late fees from $32 to $8, is part of a broader effort by the Biden administration to eliminate unfair fees, potentially saving consumers $10 billion annually.
Bank trade groups argue that the $8 late fee cap will lead to increased late payments, higher debt, and reduced credit access for consumers.
The lawsuit also challenges the constitutionality of the CFPB, citing its funding mechanism from the Federal Reserve as a violation of the appropriations clause.
Financial experts are divided on the long-term impact of the $8 late fee cap, with some warning that banks may find ways to recoup lost revenue through other means.