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Financial Services Law Insights and Observations

Democratic senators pen letter to trade org. that brought suit against CFPB’s credit card late fee rule

Federal Issues CFPB Credit Cards Junk Fees U.S. Senate

Federal Issues

On April 14, two Democratic senators, Sen. Elizabeth Warren (D-MA) and Sen. Sheldon Whitehouse (D-RI), wrote a letter to the head of a commercial trade organization that brought a lawsuit against the CFPB, challenging the CFPB’s rule capping credit card late fees. As previously covered by InfoBytes, the trade organization and other business groups sued the CFPB, challenging its recent final rule limiting most credit card late fees to $8. The senators wrote that the trade organization’s decision to sue was “outrageous and unwarranted” as the senators sought an explanation for the opposition.

The senators stated that the lawsuit was “frivolous,” and argued that the trade organization neglected “Main Street businesses” and instead was “doing the dirty work of its big bank members” who charged these high fees. Bolstering their position that the rule would cover large credit card issuers only, the senators noted that the rule would be expected to apply to less than one percent of the 4,000 financial institutions offering credit cards. Further, the senators argued that this lawsuit was a pattern of the trade organization representing the interests of large corporations, citing a report that found that only 23 of the 28 million small businesses in the U.S. benefited from the trade organization’s litigation. In seeking an explanation, the senators requested answers to a series of questions, including “How did [the trade organization] reach the decision to sue the CFPB to stop the agency from putting this rule in place?” and “Has the [trade organization] conducted an economic analysis of how the CFPB proposal would impact its members?”