CFPB Settles Lawsuit Over Credit Card Late Fee Rule CUToday (April 15, 2025)

​WASHINGTON—The Consumer Financial Protection Bureau has reached an agreement with plaintiffs to settle a lawsuit over its rule on credit card late fees.

Last year, the CFPB finalized a rule that reduced the safe harbor limit for late fees to $8, removed the higher threshold for repeat violations, and eliminated the annual inflation adjustment originally established by the Federal Reserve in 2010. In response, the ABA, along with the U.S. Chamber of Commerce and other plaintiffs, filed a legal challenge in the U.S. District Court for the Northern District of Texas, arguing that the bureau had overstepped its statutory authority.

​Under the terms of the settlement, the Bureau acknowledged it exceeded its authority under the Credit Card Accountability Responsibility and Disclosure Act, and that the late fee rule violates the Administrative Procedure Act. The parties asked the court to vacate the final rule. The judge must approve the agreement, the ABA Banking Journal reported.

In a joint statement, ABA and the other plaintiffs called the agreement a win for consumers and common sense.
“If the CFPB’s rule had gone into effect, it would have resulted in more late payments, lower credit scores, higher interest rates and reduced credit access for those who need it most,” they said. “It would have also penalized the millions of Americans who pay their credit card bills on time and reduced important incentives for consumers to manage their finances. We look forward to the court’s consideration of our joint request to vacate the rule.”

DCUC Reacts
The Defense Credit Union Council said the settlement represents "a critical step forward in reforming regulatory overreach" that would have significantly hindered credit unions’ ability to serve their members effectively.
"The CFPB’s final rule not only exceeded its statutory authority under the Credit CARD Act but also posed a direct threat to the financial well-being of millions of Americans—including those in vulnerable and underserved communities," said Anthony Hernandez, DCUC president/CEO.

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