CFPB Begins Review of Credit Unions’ Criminal Procedures Costing Consumers $12 Billion Annually | Consumer Protection Agency

The Consumer Financial Protection Bureau (CFPB) is taking the first step against credit card companies’ penalty policies that cost consumers $12 billion each year, starting with looking at the most late payments. In an Advance Notice of Proposed Rulemaking published today, the CFPB asks for comments on the Federal Reserve Board of Governors’ 2010 immunity provision for large late fees that allows credit card companies to escape the analysis of enforcement. The CFPB is seeking information about late credit and late payment fees, assessing whether those fees are “fair and equitable.” We are also seeking information about issuers’ income and expenses, the impact of late payments, and the contribution of late payments to income of credit companies.

“Old credit card fees are the biggest source of income for card issuers. We want to know how cardholders are justifying these fees and whether the current laws are undermining the changes made by Congress more than a decade ago,” said a CFPB Director Rohit Chopra. “This effort is especially appropriate because the current rules can give companies the incentive to create large increases based on the economic value.”

Credit CARD Act of 2009

To address concerns of widespread abuse by the credit card industry, Congress enacted the Credit Card Accountability and Disclosure Act of 2009 (CARD Act). The law limited the amount of damage fees, forced contract penalties, and other questionable practices. For example, Congress has banned credit cards that charge high fees and charges, “public disadvantage” slogans, and hidden kickbacks in college marketing to students. It also created many other protections for cardholders, including limiting the amount credit card companies can charge for late payment penalties. In a congressional review of the CARD Act in 2013, the CFPB found that the CARD Act reduced the total cost of credit card credit by two percent, but only reduced late fees by $1.5 billion a year.

Fed’s Safeguards

The CARD Act banned capital punishment. In 2010, the Federal Reserve Board of Governors (Fed) votes to implement provisions of the CARD Act that require penalties to be “reasonable and proportionate to the omission or violation.” In its rule, the Fed was prohibited from increasing the revenue from late bills beyond what was needed to cover the cost of late payments. However, the Fed also included a provision that would allow lenders to escape enforcement scrutiny if they set fees at a certain level, even if it is unreasonable. fees to prevent late payments and earn more money. The Fed also allowed the fees to rise above inflation. Today, these limits have risen to $30 for the first late payment and $41 for late payments within 6 billing cycles.

Advance Notice of Rulemaking

Under the Consumer Financial Protection Act, Congress delegated authority to adjust late payment provisions from the Fed to the CFPB. Today, the CFPB published an Advance Notice of Proposed Rulemaking to review the Fed’s defenses and determine whether adjustments are needed to address the old bills. Late payment penalties are added to interest if the cardholder does not make the minimum payment by the due date.

More than 175 million Americans hold at least one credit card. In March, the CFPB issued a report, Late credit card payments, found that many large media companies were paying the maximum back pay allowed under the security provisions; 18 of the top 20 offer late fees at or near record highs. The report also found that the debt market continues to make huge profits from late payments. Credit card companies estimated $12 billion in late payment penalties in 2020. This accounts for 10 percent of the total value of credit cards to consumers. And that income comes from people who live in low-income neighborhoods.

The Daily Notice of Proposed Rulemaking asks publishers, consumer organizations, and the public to comment on the following:

  • How do credit card issuers determine the amount of late fees? How should the fee be calculated so that it is more or less related to the actual costs to the issuer? How is the fee related to the account balance?
  • Are income goals part of determining late fees? How do they calculate profits for card issuers?
  • What are the costs and losses of cardholders and late payments?
  • Does it have a disruptive effect on old bills? Does quantity matter? Do card issuers issue other penalties other than late fees for late payments?
  • What methods are card issuers using to encourage on-time payments, including autopay and notifications?
  • How many calendar days after the due date do customers pay late? For example, what percentage of accounts are less than 24 hours late versus 30 days late?
  • For bondholders, what is the annual income from interest and fees? What are the annual expenses?

Read the Preliminary Notice of Proposed Rule regarding Late Payment Loans and Late Payments.

Public comments will inform changes to Regulation Z, which implements the CARD Act and the Truth in Lending Act. The deadline for submission of information is July 22, 2022.

Customers experiencing a problem related to credit card billing or other financial products or services may submit a complaint to CFPB online or by phone (855) 411-CFPB (2372).


The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal financial laws and ensures that markets for financial products are fair, transparent, and competitive. For more information, visit

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