- A group of seven senators sent a letter Tuesday to the CEOs of ten of the largest U.S. credit card issuers, demanding details about their companies’ late fee practices and citing a Consumer Financial Protection Bureau effort to curtail those fees. They demanded responses by May 23.
- Sens. Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Jack Reed (D-RI), Richard Blumenthal (D-CT), Tammy Baldwin (D-WI), Peter Welch (D-VT) and Bernie Sanders (I-VT) sent the letter to the CEOs of PNC, JPMorgan Chase, Capital One, Citigroup, Discover, Bank of America, American Express, Wells Fargo, US Bancorp and USAA asking about the big banks’ efforts “to quash that rule.”
- Banks and bank trade groups have pushed back on the CFPB’s February proposal to limit credit card late fees to $8 per payment and ban those fees from being over 25% of the minimum payment.
Consumers have logged thousands of complaints with the CFPB over credit card late fees, the lawmakers’ letter said, and the CFPB’s effort aligns with Congress’s aim to shelter consumers from excessive fees.
The group of senators asked the CEOs in separate letters to each to specify how much money in credit card late fees is collected annually at their banks and what portion of those fees are collected from low-income families; the estimated per-year cost of collecting late credit card payments; and whether they agree with bank lobbyists who contend the change will only harm those it intends to help.
The letter also noted a number of banks have eliminated overdraft fees without increasing costs for consumers. “How do you reconcile this with the lobby’s argument that consumers will pay the price for limited late fees?” the lawmakers asked.
A spokesperson for US Bank referred to comments from the American Banker Association on the topic. That association joined with other bank interest groups in commentary on the CFPB rule proposal earlier this month insisting that the CFPB’s assumptions about the fees are wrong and warning that its policy approach would harm all credit cardholders.
“Unlike the Bureau’s mischaracterization of late fees, consumers understand late fees and recognize the importance of late fees in promoting responsible consumer behavior and more efficiently allocating costs,” the financial institutions argued in their May 3 letter to the agency.
The Bank Policy Institute also Tweeted this Tuesday: “There’s a lot wrong with this narrative. Banks support robust consumer protections. And there are a lot of them.”
A spokesperson for Wells Fargo declined to comment. Spokespeople for the other banks, including card companies American Express and Discover Financial Services, didn’t immediately respond to a request for comment.
The CFPB’s proposed amendment to the Credit Card Accountability Responsibility and Disclosure Act, also known as the Card Act of 2009, would also terminate automatic annual inflation adjustments to late fees.
The agency has said its proposed changes would save American families up to $9 billion annually. Prior to the May 3 deadline, more than 200 comments on the CFPB proposal were submitted by banks, credit unions, consumer finance organizations and individuals.