April 15, 2024

Warren, Whitehouse Demand Explanation for U.S. Chamber of Commerce Lawsuit to Stop CFPB Late Fees Rule

"The CFPB proposed this rule to rein in exploitative late fee practices and properly enforce the law. The Chamber’s decision to sue the CFPB represents exactly the type of 'frivolous litigation' that your organization claims to oppose.”

“This meritless lawsuit is just the latest in a string of outrageous industry-backed court challenges in Texas against the CFPB.”

Text of Letter (PDF)

Washington, D.C. – Senators Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.) wrote to the U.S. Chamber of Commerce (Chamber) demanding an explanation for their decision to sue the Consumer Financial Protection Bureau (CFPB) over its rule that caps most credit card fees at $8 and their defense of credit card companies’ exploitative late fee practices. The Chamber filed a lawsuit just two days after the CFPB finalized the rule, which was estimated to save consumers as much as $10 billion annually.  

In 2022, credit card companies charged cardholders $25.4 billion in overall fees, including $14.5 billion in late fees, according to the CFPB. Late fees, which can be incurred for payments that are only a few hours late, can be as high as $41. The new CFPB rule requires credit card issuers to justify late fees exceeding $8 (the amount that the CFPB estimates is sufficient for covering costs to most card issuers), ends automatic annual inflation adjustments to late fees, and caps late fees at 25% of the required minimum payment. The rule applies to large credit card issuers that have at least 1 million open accounts, which make up less than 1 percent of the 4,000 financial institutions in the U.S. that offer credit cards. The CFPB has seen vast support for the rule throughout the rulemaking process. 

The lawmakers argue that the Chamber of Commerce’s decision to oppose the rule is inconsistent with their goals and indicates that the Chamber is not adequately representing its membership.  

“Instead, the ‘Chamber is again doing the dirty work of its big bank members,’ such as JPMorgan, Citi, and Bank of America, who are notorious for ripping off Americans with credit card late fees,” the lawmakers write. A recent report found that the majority of the Chamber’s litigation in recent years benefitted large corporations, and that only about 0.0001% of small businesses benefited from the Chamber’s litigation. 

In the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), Congress required that late fees be “reasonable and proportional” to costs incurred by the issuer. The senators argue that by charging fees as much as five times higher than the costs they incur because of late payments, big banks are not meeting this standard. 

The lawmakers are requesting answers about the Chamber’s decision to sue the CFPB and how the late fee rule would impact its members and small businesses by April 29, 2024. 

Senator Warren is a long-time leader in protecting consumers from predatory fees and practices: 

  • In July 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection, Senator Warren blasted big banks’ use of predatory overdraft fees and called on the CFPB to continue its oversight of these giant banks. 

  • In June 2023, Senator Warren sent a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra highlighting findings from a recent investigation into the late fee practices of the ten largest credit card issuers and urging the CFPB to finalize its proposed rule that would save American families up to $9 billion a year.

  • In June 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren applauded the Consumer Financial Protection Bureau’s (CFPB) proposed rule to cap unreasonable credit card late fees, which could save working families billions of dollars each year.

  • In May 2023, Senator Warren led lawmakers in sending a letter to ten of the largest credit card issuers – PNC, JPMorgan Chase, Capital One, Citigroup, Discover, Bank of America, American Express, Wells Fargo, US Bancorp, and USAA –  requesting information on their credit card late fee practices following the Consumer Financial Protection Bureau’s (CFPB) proposed rule to limit exorbitant late fees and the banking lobby’s strong pushback against this proposed rule.

  • On February 15, 2023, Senator Warren delivered a speech on the fight to protect our economy and outlined an agenda for what’s next to increase competition.

  • On December 16, 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren asked Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra about the CFPB’s achievements over the last year to hold big banks and giant corporations accountable and put money back in working families’ pockets. 

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