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Jeffrey P. Naimon quoted in American Banker article, “Bankers fear CFPB will lower cap on credit card late fees”

American Banker

The American Banker article, “Bankers fear CFPB will lower cap on credit card late fees,” discussed the bureau’s desire to seek a lower cap on credit card late charges as a safeguard to cardholders despite credit card companies being within the maximum limits allowed under the CARD Act. Naimon noted, “Late fees are assessed for not paying a charge after a grace period, understood by consumers, and embedded in federal and state law and regulation, so making the case that late fees violate federal law has proven difficult for the CFPB.

The industry is concerned that the CFPB plans to use its UDAAP enforcement powers to allege that late fees are discriminatory. Recently, the bureau asserted for the first time that discrimination, regardless of intent, violates UDAAP.  Naimon pointed out, “The CFPB’s argument is that the disproportional effect of late fees on protected minority consumers is evidence of discrimination, and its updated exam manual stating that discrimination is ‘unfair’ creates the hook that the CFPB needs to allege a violation of federal law.”

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