Consumer bureau takes step back on capping credit card fees

{mosads}The CFPB opted to weaken the rule after a South Dakota bank challenged a previous rule on the matter and a court awarded an injunction blocking the prior proposal.

When Congress enacted the Credit Card Accountability Responsibility and Disclosure Act of 2009, it charged the Federal Reserve with implementing new limits on the amount of fees companies could charge card holders. In January 2010, the Fed unveiled a rule that would limit fees assessed one year after an account was opened to 25 percent of a card’s total credit limit. The Fed later expanded the rule to state that the threshold would also apply to fees charged before a card was issued, such as application fees.

That move brought on a court challenge by one card issuer, which argued the Fed had overstepped the bounds of the statute by expanding the rule. The court agreed to block the amendment, preventing it from taking effect.

When the CFPB opened its doors in July, those rules fell under its new jurisdiction. And now the bureau has agreed to roll back the attempt to apply the cap to pre-card fees, in an effort to address “the uncertainty caused by the litigation.”

The bureau is now seeking public comment on its proposed changes.