WASHINGTON — A group of Senate Democrats asked several banks to explain their policies regarding customer late fees.
The group, led by Sen. Elizabeth Warren, D-Mass., and joined by Senate Banking Committee Chairman Sherrod Brown, D-Ohio, wrote letters Tuesday to ten of the country's largest credit card issuers: PNC, JPMorgan Chase, Capital One, Citigroup, Discover, Bank of America, American Express, Wells Fargo, U.S. Bancorp and USAA. The letter questions how much each company makes off late fees each year and the total cost annually of collecting those fees.
The letter comes as the comment period closes on the Consumer Financial Protection Bureau's
"Unfortunately, banks have exploited a safe harbor granted by the Federal Reserve Board to charge fees as much as five times higher than the costs they incur because of late payments," the lawmakers wrote. "That is why we were glad to see the CFPB propose a rule to rein in exploitative late free practices and properly enforce the law."
The CFPB rule, and President Joe Biden's general campaign against so-called "junk fees" has pulled fierce opposition from banking groups and the industry in general. Bank executives have argued that reducing late fees would raise the cost of credit for all consumers.
"Many banks have reduced or eliminated overdraft fees, another harmful junk fee, without raising costs for consumers," the Democratic senators said in the letters. "How do you reconcile this with the lobby's argument that consumers will pay the price for limited late fees?"
