WASHINGTON (Reuters) – The U.S. consumer watchdog will revisit its rules around credit card fees in a bid to stamp out abuses, discourage excessive late fees and boost competition, the agency’s director told Congress on Wednesday, confirming a Reuters April report.
“I am asking the staff to look at whether we should reopen the CARD Act rules … to determine whether there needs to be any changes,” said Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra.
“We want to make sure … that credit cards are a competitive market that people can use to find lower rates,” he added, highlighting the need to specifically address late fees.
Chopra was responding to a lawmaker’s question about the Credit Card Accountability Responsibility and Disclosure Act, a measure enacted in 2009 to curb abuses following the global financial crisis.
His statement to members of the House Financial Services Committee comes after Reuters reported this month that the agency would ramp up enforcement actions against lenders that illegally charge credit card late-payment fees and may rewrite its rules that set thresholds for such fees.
The development also marks an escalation of a broader crackdown by the CFPB on what it calls “junk fees,” a catch-all for overdraft, credit card late-payment fees, bounced check fees, and other charges.
Banks and credit unions pulled in more than $15 billion inoverdraft and related fees in 2019 and $12 billion in latecredit card fees in 2020, according to CFPB estimates.
Chopra, who was sworn in as CFPB director in October, testified to lawmakers for a second day on Wednesday after spelling out his agency’s policy directions and enforcement actions to the Senate Banking panel a day prior.
“The credit card market is critical to the U.S. and we need to make sure we’re living up to the ideals that Congress has set out in the CARD Act,” Chopra added.
(Reporting by Katanga Johnson in Washington; Editing by Michelle Price and Richard Pullin)