The Consumer Financial Protection Bureau (CFPB) unveiled a measure yesterday that would scrutinize excessive credit card fees and demand card issuers disclose more data around revenue and expenses in a bid to stamp out abuses and boost competition, Reuters reported. The review would also assess whether such fees are "reasonable and proportional," the CFPB said in its release. It will also assess the potential deterrent effect of late fees, and the role late fees play in credit card companies’ profitability," the agency said. "Credit card late fees are big revenue generators for card issuers." said CFPB Director Rohit Chopra. "Today's effort is particularly timely since current rules might give companies the incentive to impose big hikes based on inflation," added Chopra, underscoring that the watchdog wants to know how the card issuers determine these fees and whether existing rules are undermining Congressional reforms enacted following the 2007-2009 global financial crisis. Card issuers generally charge a late-payment fee when a customer misses their minimum payment deadline. The current rules contain a legal safe harbor which allows lenders to charge late fees provided they do not exceed a "reasonable and proportional" regulatory cap which is set annually by the CFPB. Banks and credit unions pulled in more than $15 billion in overdraft and related fees in 2019 and $12 billion in late credit card fees in 2020, according to CFPB estimates.
