President Joe Biden’s attempts to enact a law capping late fees on credit cards at $8 have been thwarted by a Texas judge.
The United States Consumer Financial Protection Bureau states that the rule, which was scheduled to go into effect on Tuesday, would have reduced fees from an average of $32.
“The credit card lobby’s lawsuit is an attempt to derail a rule that will save families $10 billion each year in order to continue making tens of billions of dollars in profits by charging borrowers late fees that far exceed their actual costs,” a representative for the Consumer Financial Protection Bureau stated.
The ruling on Friday by Judge Mark Pittman of the U.S. District Court for the Northern District of Texas was hailed as a “major win” by the conservative U.S. Chamber of Commerce.
A month after Biden unveiled a more comprehensive plan to reduce so-called “junk fees” for credit cards, travel, and cable, the CFPB finalized the regulation in March.
Then, claiming the rule breaches state laws, the Chamber of Commerce and other groups filed a lawsuit to stop its implementation.
If approved, credit card companies that have more than a million accounts would be subject to the rule. According to the CFPB, the big businesses account for more than 95% of all credit card debt that is now outstanding.
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The rule, according to the Consumer Financial Protection Bureau (CFPB) in March, was created to remedy a 2010 gap that was “exploited by credit card giants.”
Pittman’s decision on Friday was warmly received by the Chamber of Commerce.
“This ruling is a major win for responsible consumers who pay their credit card bills on time and businesses that want to provide affordable credit,” Chamber of Commerce Litigation Center counsel Maria Monaghan stated.
“The CFPB’s attempted micromanagement would have raised costs for most credit card users and made it harder for businesses to meet consumers’ needs. The U.S. Chamber will continue to hold the CFPB accountable in court.”
