We discussed the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee proposed rule here 13 months ago, and today, the Bureau announced that it has finalized the rule (Final Rule) setting a safe harbor amount for late fees at $8 and eliminating the annual inflation adjustments to that safe harbor amount, for larger card issuers. Notably, due to industry pushback during the comment period, the Final Rule does not codify the proposal that late fees must not exceed 25% of the minimum payment. The Final Rule will take effect 60 days after publication in the Federal Register.

These Final Rule restrictions only apply to credit card issuers which, together with their affiliates, have one million or more open accounts. Under the Final Rule, these larger card issuers will be able to charge late fees above the $8 threshold so long as they can prove (presumably to the CFPB’s satisfaction) the higher fee is necessary to cover their actual collection costs. “Smaller Card Issuers,” as defined under the Final Rule, are not affected by these requirements, and revised safe harbor amounts for violating the terms or other requirements of an account are established in the Final Rule.

The Final Rule’s announcement triggered immediate backlash from the industry. The U.S. Chamber of Commerce announced it will “imminently” file a lawsuit against the CFPB to prevent the regulation from taking effect. “Once again, the [CFPB] has exceeded its authority. The agency’s final credit card late fee rule punishes Americans who pay their credit card bills on time by forcing them to pay for those who don’t. This will result in fewer card offerings and limit access to affordable credit for many consumers.”