A federal judge on Tuesday threw out a US Consumer Financial Protection Bureau rule capping credit card late fees at $8, after the agency agreed with opponents that the rule adopted during President Joe Biden’s administration was illegal.
US District Judge Mark Pittman in Fort Worth, Texas granted a joint request by the CFPB and a coalition of six business and banking groups, including the U.S. Chamber of Commerce and American Bankers Association to scrap the rule.
Pittman, an appointee of President Trump, ruled that the regulation violated the Credit Card Accountability and Disclosure Act of 2009 because it prohibited card issuers from charging fees “reasonable and proportional to violations.”
The rule capped late fees for issuers with more than 1 million open accounts unless they could prove higher fees were necessary to cover their costs.
It had been part of Biden’s crackdown on “junk fees,” and was intended to reduce the typical late fee from about $32.
The Trump administration is reversing many Biden-era rules and policies that it considers unfriendly to business.
In a March 2024 lawsuit against the rule, the business and banking groups accused the CFPB of overstepping its authority and ignoring Congress’ intent that fees be high enough to deter late payments and compensate card issuers for their costs.
They also said the rule was unfair to many consumers, because it would force issuers to pass costs to cardholders who pay their bills on time.
In a joint statement on Tuesday, the groups called Pittman’s order “a win for consumers and common sense.”
The Trump administration has also sought to dismantle the CFPB.
On April 11, a federal appeals court in Washington, D.C. said the administration can shrink the CFPB, but not so much that it cannot carry out its statutory duties.
