Banks seek extension for comments on CFPB’s credit card late-fee plan | PaymentsSource

Seven bank trade groups wanted more time to comment on the Consumer Financial Protection Bureau’s proposal to cut credit card late fees to as low as $8.

The trade group asked CFPB Director Rohit Chopra in a letter this week for a 60-day extension through June 3, or up to 90 days after the proposed rules are published in the Federal Register, whichever is later. The group cited the large amount of data on the number and amount of late fees paid by credit card users that CFPB requested as one of the reasons they needed more time to comment on the plan, which they opposed.

“Industry intends to provide data to CFPB in response to an agency request,” said the bank’s trade group. “Collecting data from big and small [credit card] publishers, as well as from consumers, and doing the necessary analysis, will take significantly longer than allotted time.”

Banks and credit card issuers oppose the CFPB plan to cut credit card late fees to $8, from the current average of $30 for the first late fee. The CFPB plan has the potential to eliminate $9 billion a year in revenue at banks and credit card issuers.

Hundreds of small community banks and credit unions claim they will be hurt if the CFPB limits late payments on credit cards to 25% of the minimum payment. The trade group said the CFPB violated a requirement in the Dodd Frank Act to hold small business review panel before issuing master rules that will impact minor entities.

In February, the CFPB proposed amendments to Regulation Z, which implements the Truth in Lending Act, to ensure that credit card late fees are “reasonable and proportionate”. The CFPB proposal would adjust the current “safe harbor” dollar amount for late fees to $8 and eliminate the higher “safe harbor” amount for subsequent violations. The proposal would also do away with the current provision that allows financial institutions to increase late fees annually in line with inflation. Overall, the proposal would limit late fees to 25% of the required payment.

Figuring out the impact of the proposed changes will take “a considerable amount of time,” the group said. The seven trade groups include the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Independent Community Bankers of America, National Association of Federally-Insured Credit Unions and National Bankers Association.

Without more time, the group said, the CFPB risks “incomplete administrative records and arbitrary agency action, and is likely to result in unintended consequences, adverse consumer and small business impacts, and ultimately create unsustainable public policies.” disabled.”