A federal judge in Texas, Mark Pittman, has temporarily blocked the Biden administration‘s plan to cap credit card late fees at $8. The plan was set to take effect next week, but the judge’s injunction has put it on hold. This decision is a victory for big banks and credit card companies, which collect billions of dollars in late fees each year.
The proposed regulation by the Consumer Financial Protection Bureau would limit late fees to $8 or require banks to justify higher fees. This would have reduced the average credit card late fee from $32 to $8. The bureau estimates that banks collect around $14 billion in late fees for credit card payments annually.
President Biden
The White House has expressed disappointment at the decision, stating that it will cost Americans over $800 million every month the rule is blocked. Consumer advocates argue that bank fees are excessive and unfair, while banks see the regulation as an attack on their business model.
The case has been criticized as an example of “forum shopping,” where companies file lawsuits in friendly districts to get favorable rulings. The US Chamber of Commerce, which led the lawsuit on behalf of the banks, welcomes the decision.
The White House has highlighted the administration’s push to clamp down on “junk fees” like late fees, ATM fees, and overdraft fees as part of President Joe Biden’s reelection campaign. Consumer advocates see this decision as a setback for consumers and a victory for corporate profits.
