The Consumer Financial Protection Bureau (CFPB) will review credit card companies and their penalty policies like fees assessed for late payments. The CFPB reports that credit card companies generate $12 billion in revenue each year from these fees. More than 175 million citizens hold credit cards. The CFPB reports that 18 of 20 credit card issuers set penalties at or near the “established maximum level.”
Rohit Chopra, CFPB Director, commented:
“Credit card late fees are big revenue generators for card issuers. We want to know how the card issuers determine these fees and whether existing rules are undermining the reforms enacted by Congress over a decade ago. This effort is particularly timely since current rules might give companies the incentive to impose big hikes based on inflation.”
In an Advance Notice of Proposed Rulemaking published today, the CFPB has requested information on the Federal Reserve Board of Governors’ 2010 immunity provision for excessive late fees.
The CFPB states that it is seeking data about credit card late fees and late payments, assessing whether those fees are “reasonable and proportional.”
The CFPB adds that the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) banned excessive penalties curtailing “a range of junk fees, coercive contract clauses, and other suspicious practices.”
The deadline for submitting comments is July 22, 2022.
The proposed rulemaking is available here.