Juan A. Lozano
HOUSTON (AP) — A Texas judge on Tuesday dumped federal rules that close out credit card deferral fees after agreeing that a coalition of officials and major banking groups with President Donald Trump’s administration is illegal.
The ruling of Fort Worth US District Judge Mark Pittman announced the day after the Consumer Financial Protection Agency announced that the collection of major trade associations that filed a lawsuit last year has reached an agreement to abandon the rules. The groups sued included the American Bankers Association, the Consumer Bankers Association, and the American Chamber of Commerce.
The bank and other groups had alleged that the new rules proposed last year under President Joe Biden’s control violated the 2009 Credit Card Accountability and Disclosure or Cards Act, which was enacted to protect consumers from unfair practices by credit card companies. The group argued that the new rules do not allow credit card issuers to charge fees that adequately describe the deterrence or consumer conduct regarding repeated violations.
“The parties agree that under the Deferred Fee Rules, the Bureau has violated the Card Act by not allowing the card issuer to “charge a reasonable and proportional fine fee for the violation,” CFPB’s attorney wrote Monday, breaking the rules in a joint complaint with the banking group.
Banks are pushing hard to stop late fee rules for the potential billions of dollars that banks lose in income. The CFPB estimated last year when the bank issued a proposal that it brought in credit card late fees of around $14 billion a year.
“This is a victory for consumers and is common sense. If the CFPB rules were in effect, it would have resulted in more payments, more credit scores, higher interest rates and reduced credit access for those who needed it most.
Even if the lawsuit moves forward, Pittman is likely to win in the December ruling, he said he is likely to win as he discovered that the new rules violated the Card Act by not allowing the new rules to charge reasonable and proportionate fines for the violation.
The CFPB has been confused since the Trump administration began dismantling it earlier this year, targeting mass shootings and excluding various enforcement actions against companies such as Capital One and Rocket Homes. Last month, a federal judge issued a preliminary injunction temporarily suspending the agency’s closing mise.
The CFPB was created in the wake of the 2008 financial crisis to protect consumers from unfair, deceptive or abusive practices by a wide range of financial institutions and businesses.
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Original issue: April 15th, 2025, 7:10pm EDT
