Payment Processing + Cards

On June 18, the Fifth Circuit Court of Appeals granted the plaintiffs’ petition for a writ of mandamus, effectively halting the transfer of the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee rule from a Texas federal district court to the District of Columbia. This decision marks another pivotal moment in the ongoing legal battle over the CFPB’s Final Rule, which has seen a complex procedural history unfold over the past few months.

Yesterday, the Consumer Financial Protection Bureau (CFPB or Bureau) announced it has finalized a rule outlining the qualifications to become a recognized industry Standard Setter body (Standard Setter Rule). These bodies will be instrumental in issuing standards that assist companies in complying with the forthcoming Personal Financial Data Rights Rule under Section 1033 of the Consumer Financial Protection Act (Section 1033 Rule). The Standard Setter Rule outlines the attributes that these bodies must exhibit to gain recognition from the CFPB. It also provides a comprehensive guide detailing the application process for recognition and the CFPB’s evaluation methodology.

The Consumer Financial Protection Bureau (CFPB or Bureau) has issued a circular warning covered persons that including unlawful or unenforceable terms and conditions in consumer contracts can violate the prohibition on deceptive acts or practices in the Consumer Financial Protection Act (CFPA).

Yesterday, the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee rule (Final Rule) was ordered to be transferred from the U.S. District Court for the Northern District of Texas to the District Court for the District of Columbia (D.D.C.) for the second time in as many months. The court’s decision was largely based on the same analysis as the first transfer order.

On May 10, a Texas federal court granted a preliminary injunction enjoining the Consumer Financial Protection Bureau (CFPB or Bureau) from implementing the credit card late fee rule, most recently discussed here. The court found the plaintiffs demonstrated a likelihood of success based on their reliance on the Fifth Circuit’s decision in CFPB v. Community Financial Services Association of America, Ltd. finding that the CFPB’s “double-insulated funding scheme is unconstitutional.” The court further found that the balance of interest test weighed in the plaintiffs’ favor because if the court denied the injunction, “[p]laintiffs face an enormous undertaking based upon a potentially unconstitutional rule,” whereas if the court granted the injunction “the CFPB is relatively unaffected because the Final Rule has not yet gone into effect.”

Today, the Consumer Financial Protection Bureau (CFPB or Bureau) published an Issue Spotlight focusing on consumer complaints relating to credit card rewards programs. The report notes that credit card companies often focus marketing efforts on rewards, like cash back and travel, instead of on interest rates and fees. However, the CFPB has previously reported that consumers who carry debt from month to month earn just 27% of rewards at major credit card companies, while paying 94% of the interest and fees that those companies charged. In its analysis of several hundred complaints relating to these rewards programs, the Bureau identified four recurring themes: 1) vague or hidden promotional conditions; 2) devalued rewards; 3) customer service issues that delay or block reward redemption; and 4) issuers unilaterally revoking reward balances.

On May 3, the U.S. Court of Appeals for the Fifth Circuit entered an order denying the CFPB’s (CFPB) petition for a panel rehearing and effectively setting the stage for a long-awaited ruling on a preliminary injunction in the ongoing lawsuit challenging the CFPB credit card late fee rule. The petition was filed by the CFPB to reconsider the panel’s order vacating the district court’s order that transferred the case to the U.S. District Court for the District of Columbia and issuing a writ of mandamus directing the district court to reopen the case.

On April 30, the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the district court’s effective denial of the motion for a preliminary injunction filed by several trade groups, including 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 (collectively, the trade groups). The trade groups are challenging the credit card late fee rule issued by the Consumer Financial Protection Bureau (CFPB) as unconstitutional and violative of the Administrative Procedures Act and seek a preliminary injunction while the case is pending.

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On April 5, the U.S. Court of Appeals for the Fifth Circuit issued an order effectively reversing the district court’s decision to transfer the lawsuit challenging the Consumer Financial Protection Bureau’s (CFPB or Bureau) credit card late fee rule from the Northern District of Texas to the District Court for the District of Columbia (D.D.C), finding that the Texas district court lacked jurisdiction to issue its order because the plaintiffs’ appeal of the effective denial of their motion for preliminary injunction was already pending before the appellate court.