Banking Committee Ranking Member Sen. Tim Scott Introduces Resolution to Overturn CFPB Late Fee Rule

Apr 10, 2024Congressional Legislation, Federal Regulation, News

Earlier this week, Senate Banking Committee Ranking Member Tim Scott (R-S.C.) introduced a resolution aimed at overturning the CFPB’s recently finalized rule limiting late payment fees on consumer credit cards issued by the largest credit card issuers. The Bureau claims that the rule will save American families more than $10 billion each year in late fees by reducing the typical fee from $32 to $8.

“Now is the wrong time to play political games that limit access to credit,” Ranking Member Scott said in a statement. “But that’s exactly what the CFPB’s rule to limit credit card late penalties will do – it will decrease the availability of credit card products and important financial services, particularly for Americans who need them most.”

“Lawful and contractually agreed upon payment incentives promote financial discipline and responsibility, and this rule shows that the CFPB is more focused on scoring political talking points than policies that protect consumers,” Scott continued.

Cosponsors of the legislation include Sens. John Thune (R-S.D.), John Barasso (R-Wyo.), Jerry Moran (R-Kan.), John Boozman (R-Ark.), Steve Daines (R-Mont.), Mike Rounds (R-S.D.), Thom Tillis (R-N.C.), Marsha Blackburn (R-Tenn.), Kevin Cramer (R-N.D.), Mike Braun (R-Ind.), Bill Hagerty (R-Tenn.), and Katie Britt (R-Ala.). The resolution is also being supported by a wide variety of industry groups, including the Consumer Bankers Association, America’s Credit Unions, Independent Community Bankers of America, Bank Policy Institute, American Bankers Association, Americans for Tax Reform, Competitive Enterprise Institute, and the U.S. Chamber of Commerce.

Scott has long been critical of the CFPB’s efforts to rein in late fees. In April 2023, he wrote to CFPB Director Rohit Chopra “criticizing the agency’s attempts to demonize commonsense initiatives that promote financial responsibility while highlighting the harms the rule would have on the cost and availability of credit for American consumers,” according to Sen. Scott’s press release. Then, in June 2023, he lambasted Chopra’s attempts to label legitimate payment incentives as “junk” or “illegal” fees.

In addition to Sen. Scott’s resolution, the late fee rule is the subject of a contentious court battle in which a coalition of banking groups have sued the CFPB in an attempt to overturn it. The legislation is unlikely to pass Congress, and even if it does would likely be vetoed by the White House.

Pin It on Pinterest