Texas Court Halts CFPB’s Credit Card Late Fees Rule

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The Northern District of Texas on Friday granted the U.S. Chamber of Commerce Litigation Center’s motion for a preliminary injunction to stop the Consumer Financial Protection Bureau’s credit card late fees rule from taking effect this week. The CFPB finalized the rule in March, capping credit card late fees at $8 and eliminating the automatic annual inflation adjustment for the threshold. The rule applies to issuers with more than one million open accounts.

According to the U.S. Chamber of Commerce, “This ruling is a major win for responsible consumers who pay their credit card bills on time and businesses that want to provide affordable credit. The CFPB’s attempted micromanagement would have raised costs for most credit card users and made it harder for businesses to meet consumers’ needs. The U.S. Chamber will continue to hold the CFPB accountable in court.”

The judge sided with financial institutions, holding that the CFPB’s funding mechanism is unconstitutional and invalidates the rulemaking. The U.S. Supreme Court is expected to issue a decision by the end of June on a similar case, which could impact this lawsuit regarding the credit card late fees rule.