A federal appeals court ruled that litigation challenging the Consumer Financial Protection Bureau's $8 credit card late fee rule will remain in Texas and not be transferred to Washington D.C.
On Tuesday, a three-judge panel of the Fifth Circuit Court of Appeals ruled that the case will be tried in Fort Worth by District Court Judge Mark Pittman, rejecting a second order to
The CFPB could appeal for a rehearing by the Fifth Circuit, but industry experts think the case will remain in Texas. The rule
"The industry is on the cusp of winning this case," said Alan Kaplinsky, senior counsel at Ballard Spahr.
The 5th Circuit is widely viewed as hostile to the CFPB and favorable to industry since it
Ed Groshans, a senior policy and research analyst at Compass Point Research & Trading, said he expects the rule will move forward to address industry's complaints that the CFPB erred in setting late fees at $8.
"For late fees, costs incurred by issuers should be considered by the CFPB," said Groshans, in a research note Thursday. "However, the law does not set these costs as the sole basis to be used to set credit card late fees."
The plaintiffs that sued the CFPB — including the U.S. Chamber of Commerce, American Bankers Association and Consumer Bankers Association — have alleged that the agency set late fees at $8 using flawed data and issued the rule quickly without going through the normal rulemaking process. The business groups claim the CFPB did so largely for political reasons to aid President Joe Biden ahead of the 2024 election.
