CU Trade Groups Tell CFPB to Abandon Credit Card ‘Junk Fee’ Rule

Comments submitted to the CFPB by CUNA and NAFCU detailed concerns over the proposed rule's negative impact on credit unions and their members. Learn why.

David Baumann


May 5



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David Baumann

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David Baumann

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CUNA, NAFCU detail concerns over negative impact on credit unions and their members.

The CFPB should abandon its proposal to limit late fees on credit cards to $8, credit union trade groups have told the agency.

And in comments submitted on the proposal, the groups gained an ally in the Small Business Administration’s Office of Advocacy, which operates independently of the main SBA offices.

Consumer groups, on the other hand, are urging the agency to finalize the controversial plan.

Comments on the proposal were due Wednesday.

Backstory and Context

In February, the CFPB proposed the rule as part of the Biden Administration’s campaign to eliminate “junk fees.”

Credit unions and other trade groups immediately seized on that term, arguing that it unfairly characterized fees that financial institutions charge. In their comments on the proposed rule, the trade groups again raised that issue.

Comments on the Proposal 


“We strongly object to the government’s inflammatory messaging as it is intentionally misleading and clearly wrong-headed,” wrote Alexander Monterrubio, CUNA’s deputy chief advocacy officer and managing counsel.

He added that the proposed rule would have a negative impact on the ability of credit unions to offer viable credit card programs and manage the risks associated with those programs. Further, Monterrubio said, it would cause credit unions to increase the cost of credit cards for all members.

“If credit unions were unable to assess reasonable late fees for non-payment, then credit unions would not only face safety and soundness concerns but it’s likely the costs of non-payments would be borne by the entire membership in the form of higher interest rates or the tightening of credit standards—even for those consumers that pay their debts in a timely fashion,” he wrote.

Additionally, the comment called on the agency to postpone further development of a rule until the U.S. Supreme Court decides whether the bureau’s funding scheme is constitutional. The court has agreed to consider a case in which the Fifth Circuit Court of Appeals ruled that the CFPB’s payday lending rule was illegal, since the bureau is not funded through the annual appropriations process.

That ruling has called into question the legality of all agency actions since it was created as part of the Dodd-Frank Act.


In her comments on the late fee rule, Ann Petros, NAFCU’s vice president of regulatory affairs, said that the bureau has not provided adequate justification for establishing the $8 late fee cap.

“The proposal would be most detrimental to the exact populations the CFPB aims to protect by resulting in limited access to credit and availability of products and services suited for consumers with thin credit files,” she wrote.

Petros alleged that after President Biden mentioned the “junk fee” effort during his annual State of the Union Address, the agency was under political pressure to issue a rule and, as a result, the rulemaking process was “tainted.”

“The Bureau should exempt credit unions or, in the alternative, exempt small financial institutions with less than $850 million in assets from this rulemaking,” she said.

SBA Office of Advocacy

Major Clark, the deputy chief counsel in the SBA’s Office of Advocacy, commented that by grouping all small banks and credit unions together, the CFPB may be underestimating the impact of the rule on small financial institutions.

“Until the CFPB has sufficient data to truly ascertain the economic impact of this proposed regulation on small entities, Advocacy recommends that the CFPB maintain the status quo as it relates to small entities,” he wrote.

Consumer Groups

On the other hand, consumer groups, including the National Consumer Law Center and Americans for Financial Reform, called on the CFPB to adopt a final rule implementing the $8 limit.

“This rule, when adopted, will save consumers billions of dollars each year in late fees, putting that hard-earned money back in their pocket,” the groups said, adding that the bureau had provided ample evidence that “this amount is fair, reasonable, and proportional to the costs incurred by issuers for late payments. Put simply, the CFPB ‘showed its math’ in coming up with the amount of $8, and credit card issuers did not show their math for any alternative figure.”

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