A federal appeals court has directed a judge in Texas to make a decision by May 10 on whether to block the new rule by the U.S. Consumer Financial Protection Bureau (CFPB) capping credit card late fees at $8.
The order, issued late Tuesday by a three-judge panel of the New Orleans-based 5th U.S. Circuit Court of Appeals, came in response to a request by banking and business groups to have the appellate court itself decide on blocking the rule.
Groups such as the U.S. Chamber of Commerce and American Bankers Association argued that U.S. District Judge Mark Pittman in Fort Worth had effectively denied them a preliminary injunction by first deciding to determine whether the case should be transferred to Washington, D.C.
The 5th Circuit panel, in a 2-1 vote on April 5, held that Pittman wrongly transferred the case, sending it back to Texas. However, instead of blocking the rule, the panel set a deadline for Pittman to decide on whether an injunction was warranted.
The CFPB’s new rule, scheduled to take effect on May 14, aims to address what the agency views as “excessive” fees charged by credit card issuers for late payments, costing consumers an estimated $12 billion annually.
Under the rule, credit card issuers with over 1 million open accounts can only charge late fees up to $8, unless they can justify higher fees to cover their costs. Previously, issuers could charge up to $30 or $41 for subsequent late payments.
The business groups filed their lawsuit in the federal courthouse in Fort Worth, where the two active judges were appointed by Republican presidents and have often ruled in favor of conservative litigants challenging the agenda of Democratic President Joe Biden.
The case is known as Chamber of Commerce of the United States of America, et al, v Consumer Financial Protection Bureau, 5th U.S. Circuit Court of Appeals, No. 24-10248.
The plaintiffs are represented by Michael Murray of Paul Hastings, while Stephanie Garlock represents the CFPB.
