CBA Applauds Rep. Barr’s Request for Consumer Impact Study on Forthcoming Credit Card Late Fee Rule

WASHINGTON, D.C. – Consumer Bankers Association (CBA) President and CEO Lindsey Johnson today released the following statement in response to House Financial Services Committee Financial Institutions and Monetary Policy Subcommittee Chair Andy Barr’s (R-Ky.) letter to the Government Accountability Office (GAO) requesting a study on the impact of the Consumer Financial Protection Bureau’s (CFPB) forthcoming credit card late fee proposal:

“Thank you to Rep. Barr for raising critical questions to the GAO as it relates to the CFPB’s forthcoming credit card late fee rule. When this proposal was first introduced, CBA strongly warned of the consequences associated with the Bureau’s failure to conduct a rigorous analysis of how consumers’ cost and access to credit may be affected. This rulemaking is a striking departure from traditional risk-based pricing practices that Congress emphasized in the CARD Act’s study requirement.

“We hope policymakers will take stock of the GAO’s ultimate findings, which will help to determine how the CFPB’s final rule will impact consumers and the market – questions that the CFPB should have thoroughly analyzed in the first place.”

As Rep. Barr outlines in his letter:

“The long-term costs and impacts to consumers of this rulemaking are unclear at best and likely harmful. The rule departs from traditional risk-based pricing practices required by prudential regulators, almost certainly resulting in a higher cost of credit and reduced credit access for consumers who pay their bills on time.”

Rep. Barr’s letter continues to highlight how the proposed late fee rule is a “thinly veiled move to shift incidence of the costs to creditors of late payments onto innocent consumers” and calls on the GAO to conduct an analysis of the CFPB’s late fee rule to examine the extent to which implementation of the rule affects the following:

• The cost and availability of credit, with particular attention to effects on non-prime borrowers;
• The safety and soundness of credit card issuers;
• The use of risk-based pricing;
• Credit card product innovation;
• New fee structures and pricing in credit markets;
• Consumer credit products, and perks (rewards);
• Costs to consumers who pay their credit card bills on time;
• Deterrence effects late fees have on encouraging timely repayment; and
• Consumer credit card balances.

To read Rep. Barr’s letter to the GAO in full, click HERE.

CBA Advocacy

• To read CBA’s letter to the CFPB on the notice of proposed rulemaking earlier this year, click HERE and HERE.
• To read CBA’s letter to the U.S. Senate Committee on Banking, Housing, and Urban Affairs’ Subcommittee on Financial Institutions and Consumer Protection ahead of its hearing on “Taking Account of Fees and Tactics Impacting Americans’ Wallets,” click HERE. 
• CBA also commissioned a poll in April which found that the majority of Americans appreciate the personal responsibility associated with on-time credit card payments and don’t believe these fees constitute “junk.” In addition, the Washington Post debunked several claims included in the CFPB’s proposal to lower credit card late fees, calling the agency’s calculation’s “fuzzy math.”
• CBA launched a public affairs campaign, Washington Wallet Watch, highlighting the harm this rule will have on consumers. You can learn more about the campaign HERE.