Groundwork’s Bilal Baydoun Reacts to House Committee Vote on Junk Fees

Groundwork’s Bilal Baydoun Reacts to House Committee Vote on Junk Fees

Today, the U.S. House Financial Services Committee approved legislation that would repeal a rule by the Consumer Financial Protection Bureau to cap credit card late fees at $8. Groundwork Collaborative Director of Policy and Research Bilal Baydoun reacted with the following statement:

“Excessive credit card late fees mean many consumers are being gouged twice: once at the checkout line and again when they pay their credit card bill. Efforts to shield consumers from predatory junk fees should be bolstered – not stifled by special interests.”

Email press@groundworkcollaborative.org to speak with a Groundwork expert about the impact of junk fees and profiteering.

Background

• The CFPB rule caps late fees at $8 unless companies can “show their math” and demonstrate that a higher fee is needed to cover their collection costs. It also ends the annual inflation adjustment for companies with over 1 million accounts. This adjustment allowed companies to hike fees with inflation, even if their own costs didn’t rise. This rule made it clear that policymakers have the power to crack down on predatory corporate behavior.
• Before this rule, credit card companies charged as much as $41 in fees for a late payment with an average fee of about $32. The CFPB estimates that the income generated from late fees is approximately five times greater than the costs companies incur for late payment violations.