Possible last-minute freeze of CFPB rule that could save Americans $10 billion annually from late fees.

• The Consumer Financial Protection Bureau's regulation aimed at reducing Americans' credit card late fees is facing a final attempt to delay its implementation.
• In March, the industry filed a lawsuit in federal court, led by the U.S. Chamber of Commerce, to stop the new rule from being enforced by the CFPB.
• The Northern District of Texas judge is expected to decide by Friday whether to grant the industry's request for a freeze, which was set to take effect on Tuesday.

The Consumer Financial Protection Bureau's regulation aimed at reducing Americans' credit card late fees is facing a final attempt to delay its implementation.

In March, the card industry, led by the U.S. Chamber of Commerce, filed a lawsuit in federal court to stop the CFPB's new rule from being implemented.

The effort, which moved between venues in Texas and Washington, D.C., for weeks, is now close to reaching a milestone: a judge in the Northern District of Texas is expected to decide by Friday evening whether to grant the industry's request for a pause.

The regulation, which would limit banks' ability to charge late fees, was about to be implemented, but it was delayed, allowing banks to continue charging up to $35 per incident.

Tobin Marcus, lead policy analyst at Wolfe Research, stated that we should obtain clarity on whether the rule will be permitted to take effect soon.

President Joe Biden's election-year war against junk fees includes the credit card regulation.

Since 2010, big card issuers have consistently increased the cost of late fees, benefiting from users with poor credit scores who incur an average of $138 in fees per card annually, as stated by CFPB Director Rohit Chopra.

New fees, higher rates

The industry is campaigning to stop the regulations, arguing that they are misguided and will harm those they aim to help by increasing the likelihood of users falling behind on their payments.

The CFPB estimates that the rule would save American families $10 billion in fees annually by reducing late penalties from $32 to $8 per incident.

Efforts to offset revenue hits due to the rule have been discussed by card issuers such as and . This could be achieved through raising interest rates, introducing new fees for paper statements, or altering lending criteria.

Richard Fairbank, CEO of Capital One, stated last month that the CFPB rule would negatively affect his bank's revenue for a few years as the company takes measures to increase revenue from other sources.

"Fairbank informed analysts during the first-quarter earnings call that some of the mitigating actions have already been implemented and are currently underway. The company is planning to take additional actions once it becomes clearer where the litigation will settle."

Trial ahead?

Marcus from Wolfe Research believes that the Chamber of Commerce is likely to succeed in its efforts to delay the rule, either through the Northern District of Texas or the 5th Circuit Court of Appeals. If granted, a preliminary injunction could halt the rule until the dispute is resolved, potentially through a lengthy trial.

The lawsuit filed by the industry group, comprising Washington, D.C.-based trade associations such as the American Bankers Association and the Consumer Bankers Association, was done in Texas because it is perceived as a more favorable jurisdiction for corporations, Marcus stated.

"I believe that implementation of the rule will be blocked before it goes into effect, regardless of whether Texas Judge Mark T. Pittman grants the injunction on the merits or not."

The CFPB and the Chamber of Commerce did not respond to requests for comment.