WASHINGTON—While credit unions are strongly opposed to the CFPB’s proposed rules capping credit card late fees, the National Consumer Law Center and eight other advocacy groups have submitted comments in support of the plan, saying it will save consumers “billions of dollars each year in late fees and put that hard-earned money back in their pockets.”
The CFPB’s proposed rule would establish an $8 amount as a “safe harbor.” Credit card companies could charge more if they can justify the amount by showing that $8 does not adequately compensate them for their costs in dealing with late payments.
The consumer groups are calling on the CFPB to require credit card companies to publicly disclose the data relied upon to justify higher amounts to “show their math.”
“We strongly support the proposed safe harbor of $8 for credit card late fees and thank the CFPB for proposing it,” said Chi Chi Wu, senior attorney at the National Consumer Law Center. “Unlike the previous safe harbor amounts of $30 and $41, $8 is a fair amount that is reasonable and proportional to the costs incurred by credit card companies for late payments.”
‘Super-Compensatory Fees’
The NCLC alleged penalty fees greatly exceed the costs incurred by a company when a consumer pays late, saying the “super-compensatory” fees are harmful because they become a huge profit center.
“They create incentives for companies to engage in tactics to trigger late payments, which are often through unfair or abusive practices,” the organization said.
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