The U.S. Office of Consumer Financial Protection has formally initiated a regulatory process that could lead to new regulations limiting what credit card companies can charge customers for late fees, he said Wednesday. the agency.
The CFPB estimates that these rates cost the United States $ 12 billion a year, with an average rate of $ 26. Consumers with the lowest credit scores, who typically live in disadvantaged zip codes, pay an average of $ 300 a year in payment commissions alone, the agency said in a report released in March.
“Credit cards should be a safe, secure and fair source of small dollar credit, in part because Congress has codified many guarantees in federal law that give people confidence,” said CFPB Director Rohit Chopra to reporters at a press conference on Wednesday. “Our effort is especially timely given the [current rules] allow credit card companies to increase late fees according to the inflation rate “.
He noted that the 2009 CARD Act and the 2010 Act created by the CFPB give the agency the authority to regulate late fees so that they are imposed only to recover the cost of late payments to issuers. The Federal Reserve, which previously had the authority to enforce the law, also included a provision in its regulations that gave immunity to credit card companies from the application even if those fees generated excessive profits.
The CFPB took the first step in amending these rules on Wednesday by issuing a prior notice of the proposed regulation, calling for credit card issuers, consumer groups and the public to intervene to help agency to understand how late fees are set, whether in fact. deter late payments and if issuers generate excess profits.
The rule-making process is likely to be extended to next year, but it could ultimately save billions of dollars to Americans in paying dues, CFPB senior officials said.
The CFPB says credit card issuers earn $ 120 billion a year in credit card fees and interest, with 10% of that revenue coming from late fees.
Credit cards are usually issued by large banks such as Chase JPM,
and Wells Fargo WFC,
in collaboration with companies such as Visa V,
and Mastercard MA,
that maintain payment networks. Many community banks, credit unions, and retailers are also involved in issuing credit cards.