Trade Groups Challenge CFPB Credit Card Rule in Court, CFPB Accuses Them of “Forum Shopping” for Favorable Judge

At the beginning of March, the Consumer Financial Protection Bureau (CFPB) finalized its rule cutting the typical credit card late free from $32 to $8. Two days after the finalized rule was announced, a lawsuit led by the U.S. Chamber of Commerce, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, American Bankers Association, Consumer Bankers Association, and Texas Association of Business was filed in Texas federal district court seeking to invalidate the rule.

Among the issues the Plaintiffs raised in their complaint is the argument, currently awaiting a ruling by the Supreme Court, that the CFPB’s funding mechanism violates the Constitution. They also argue that the Rule violates multiple provisions in the Administrative Procedure Act.

After the complaint was filed and assigned to the same judge that overturned the Obama Administration’s Affordable Care Act, the CFPB accused the trade groups of “forum shopping,” or choosing to file it in Texas because of the high likelihood of getting a sympathetic judge. The CFPB is seeking to have the case dismissed outright or moved to Washington, D.C. where it believes it will get a fairer hearing.

The Bureau estimates that, if allowed to go into effect, the legislation will lead to a net savings of more than $10 billion in late fees for American families.