Senators Introduce Resolution of Disapproval on CFPB Credit Card Late Penalty Final Rule

WASHINGTON - At the beginning of March, the Consumer Financial Protection Bureau (CFPB) announced its final rule to restrict credit card penalties, capping late fees at $8, down from $32. The rule, which is expected to go into effect on May 14, 2024, fails to consider how the proposal would harm American consumers, resulting in lower credit scores and reduced credit availability.

With the introduction of a Congressional Review Act (CRA) resolution of disapproval, U.S. Senator Kevin Cramer (R-ND) joined Ranking Member of the Senate Banking Committee U.S. Senator Tim Scott (R-SC) to express opposition to the CFPB's rule. The CRA resolution has the support of the Consumer Bankers Association, America's Credit Unions, Independent Community Bankers of America, Bank Policy Institute, American Bankers Association, Americans for Tax Reform, Competitive Enterprise Institute, and U.S. Chamber of Commerce.

"The Bureau's misguided rule is a political ploy with long-term negative impacts. These changes will encourage frivolous spending, which will hurt their credit score and lessen their access to capital and credit services," said Cramer. "It encourages fiscal irresponsibility at a time when consumers are already being hurt by the inflation caused by overspending. This rule should be stopped."

"While Americans struggle to keep pace with record inflation under President Biden, now is the wrong time to play political games that limit access to credit. But that's exactly what the CFPB's rule to limit credit card late penalties will do - it will decrease the availability of credit card products and important financial services, particularly for Americans who need them most. Lawful and contractually agreed upon payment incentives promote financial discipline and responsibility, and this rule shows that the CFPB is more focused on scoring political talking points than policies that protect consumers,"said Ranking Member Scott.

In April 2023, Senator Cramer joined several Republican members on the Senate Banking Committee in a letter to CFPB Director Rohit Chopra, requesting the Bureau rescind the rule and "stop unfairly disparaging commonsense fees that allow businesses to offer credit, bank accounts, and financial products to individuals with a limited credit history, before these efforts cause unnecessary harm to American consumers."

Last month, the American Bankers Association joined the U.S. Chamber of Commerce, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, Consumer Bankers Association, and Texas Association of Business in filing a lawsuit challenging the CFPB's rule. In a statement, the U.S. Chamber of Commerce stated the CFPB "exceeded its authority" and said the rule "punishes Americans who pay their credit card bills on time by forcing them to pay for those who don't." The Bank Policy Institute said the rule is a "prime example of how the CFPB has been politicized, and how its regulatory actions promote rhetoric over analysis and data."

Click here for bill text.