ICBA, groups to CFPB: Seek input on review of credit card late fee safe harbor

Jan. 23, 2023

ICBA and other groups called on the Consumer Financial Protection Bureau to comply with the Small Business Regulatory Enforcement Fairness Act as it considers reducing or eliminating the safe harbor fee that credit card issuers may charge to avoid scrutiny of their fees as unreasonable.

Joint Letter: The groups said in a joint letter that the CFPB’s initiative—which is in the proposed rule stage, according to the bureau’s recent regulatory agenda—would have a significant adverse impact on a substantial number of smaller financial institutions, requiring it to seek input from small entities under SBREFA.

Background: Regulation Z permits card issuers to charge “reasonable and proportional” late fees. The safe harbor, which is indexed to inflation, is $30 for the first late payment and $41 for a subsequent late payment within six billing cycles.

ICBA Position: In a comment letter last year, ICBA said the CFPB should preserve the safe harbor fee, continue to increase the safe harbor level to account for inflation to ensure late fees retain their deterrent effect and cover the cost of processing late payments, and convene a SBREFA panel.