Democrats slam U.S. Chamber over credit card fee lawsuit

Bloomberg News

WASHINGTON — Democratic senators Monday chastised the U.S. Chamber of Commerce over the group's lawsuit against the Consumer Financial Protection Bureau's credit card late fee rule, arguing that the lawsuit is precisely the kind of suit that the Chamber itself has opposed. 

Sens. Elizabeth Warren of Massachusetts and Sheldon Whitehouse of Rhode Island sent a letter to the U.S. Chamber Monday demanding information about its lawsuit and denouncing the business group's defense of existing credit card late fees, which the lawmakers called exploitative.  

"The Chamber's decision to sue the CFPB represents exactly the type of 'frivolous litigation' that your organization claims to oppose," wrote the senators. "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 CFPB finalized the credit card late fee cap in March after its research found issuers made hefty sums on charging customers penalties for late payments, which the lawmakers said in some cases are only late by a matter of hours. The agency estimated credit card issuers charged cardholders $14.5 billion in late fees in 2022. 

The CFPB's proposed rule will compel companies to give grounds for late fees over $8 — an amount it believes sufficient to cover issuer costs associated with late payments — unless banks can demonstrate that the costs associated with late payments are higher. The rule also disallows credit companies from automatically inflating such fees year over year, and specifies that late fees must be no more than a quarter of the required minimum payment per payment cycle.

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The Chamber of Commerce sued the CFPB just days after the final rule was issued attempting to halt the rule on grounds the agency insufficiently justified its decision to cap fees at $8. The group claims the agency's lack of justification rises to the level of arbitrary and capricious, a legal standard routinely used to level procedural challenges to agency rules business groups oppose.

The senators' letter comes a week after their colleague across the aisle leveled their own challenges to the rule. Senator Tim Scott, R-S.C., introduced a resolution earlier in the month that would overturn the CFPB rule utilizing the Congressional Review Act, a law that allows Congress to overturn agency rulemaking within 90 days of finalization. 

The lawsuit itself has been controversial for other reasons. Last week a federal appeals court judge decided the late fee lawsuit can be heard in Texas, rather than Washington D.C., after a lower court judge ruled that the case would be more appropriately heard in the nation's capitol because that is the headquarters of most of the plaintiffs and the CFPB itself. The CFPB argued that same point and said the Chamber and other plaintiffs were "judge shopping" to find a venue with better odds of a favorable outcome.