In a significant development in the credit card late fee rule litigation, the Consumer Financial Protection Bureau (CFPB) has filed a status report indicating that it is actively working towards a resolution. This update follows last month’s court’s order, which required the CFPB to explain its plans for proceeding with the case.

On February 10, the U.S. District Court for the Northern District of Texas issued an order acknowledging the new leadership within the CFPB and their directive to cease “all supervision and examination activity” and “all stakeholder engagement.” The court ordered the CFPB to file a status report within 30 days, explaining how it plans to proceed in this case.

The litigation centers on the CFPB’s final rule issued on March 5, 2024, which amended 12 C.F.R. § 1026.52(b) to reduce the safe harbor for late fees from $30 for the first missed payment and $41 for subsequent late payments (within six billing cycles) to $8, and prohibited adjustments for inflation. The plaintiffs, including the Fort Worth Chamber of Commerce, challenged this rule under the Administrative Procedure Act, arguing that it exceeded the CFPB’s statutory authority under the Credit Card Accountability and Disclosure Act (CARD Act).

Latest Filing

In the status report filed yesterday, the CFPB, now under the leadership of Acting Director Russell Vought, indicated that it is reviewing its positions on various agency actions, including the regulation at issue in this case. The report states: “The Bureau respects this Court’s ruling granting a preliminary injunction and considering plaintiffs’ likelihood of success on the merits of their claims. Counsel for the Bureau have begun discussing with Plaintiffs’ counsel potential ways to resolve this case. Based on those conversations, the Bureau is optimistic that an agreement can be reached within 30 days, but the parties require additional time to see if an agreed resolution is feasible.”

The CFPB has requested that the court stay all pending deadlines in the litigation and instruct the parties to file a joint status report within 30 days if no resolution is reached before then.

Our Take

This filing suggests that the CFPB is actively seeking to resolve the litigation, potentially through a negotiated agreement with the plaintiffs. The Bureau’s optimism about reaching an agreement within 30 days indicates that significant progress may be made soon.