CFPB Notice of Proposed Rulemaking on Credit Card Penalty Fees

Recently, the CFPB announced a notice for proposed rulemaking that would amend Regulation Z (implementing TILA) to ensure that credit card late fees are “reasonable and proportional” to the late payment required.  The proposal would provide three major changes, including: (1) adjusting the safe harbor dollar amount for late fees down from $30 to $8 and eliminating the higher safe harbor ($41) that applies to late fees for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles; (2) the current provision in § 1026.52(b)(1)(ii)(D) that adjusts the safe harbor amount for annual inflation would not apply to the late fee safe harbor amounts; and (3) dictating that late fee amounts must not exceed 25% of a required payment amount.  The proposed rule is open for public comment until April 3, 2023.