Financial Services Litigation & Investigations Group
Financial Services Litigation & Investigations Group
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Brad Karp and Roberto Gonzalez Publish Op-Ed in American Banker on CFPB’s Late-Fee Proposal
June 1, 2023
Firm Chairman Brad Karp and litigation partner Roberto Gonzalez co-wrote an op-ed arguing that the Consumer Financial Protection Bureau’s proposed rule to dramatically decrease the amounts that credit card issuers charge for late fees on credit card payments would actually increase overall costs for the large majority of credit card customers. In “The CFPB's late-fee proposal would harm the consumers it seeks to help,” published on June 1, the authors explain that the proposed $8 late fee safe harbor is not high enough to deter late payments, and as a result, delinquencies would rise and consumers would face higher interest rates and maintenance fees, reduced rewards and, for consumers who often make late payments, reduced credit lines, among other potential consequences.
“It would be careless, and possibly dangerous, to finalize this rule before the full extent of its impact on consumers and the larger credit market have been thoroughly evaluated,” they write. “The proposed rule should be paused to allow for a careful, transparent analysis of the intended, and unintended, consequences of taking such sweeping action.”
The article echoed the arguments made in a comment letter submitted by Paul, Weiss to the CFPB in early May on behalf of several major credit card issuers.