Resources to help you navigate the changing regulatory landscape

An unrecognizable businessman registering for a business conference using his smart phone

CFPB Issues Final Rule on Credit Card Penalty Fees; Amends Reg Z

This week, the Consumer Financial Protection Bureau (CFPB) issued its Credit Card Penalty Fees Final Rule to “better ensure that late fees charged by certain card issuers are reasonable and proportional as required under the Truth in Lending Act.”

For card issuers that together with their affiliates have 1 million or more open credit card accounts (referred to as “Larger Card Issuers”), the final rule:

  • Adopts a late fee safe harbor threshold of $8.
  • Provides that the annual adjustments to reflect changes in the Consumer Price Index do not apply to this $8 amount.

The final rule does not adopt these revisions for “Smaller Card Issuers” (card issuers that together with its affiliates had fewer than one million open credit card accounts for the entire preceding calendar year).

For “Smaller Card Issuers,” the final rule revises the safe harbor threshold amounts for late fees to $32 for the initial violation and $43 for each subsequent violation that occurs in one of the next six billing cycles.

The California and Nevada Credit Union Leagues sent a comment letter last year to the CFPB, advocating for credit unions. The Leagues are still reviewing the rule and will provide a detailed bulletin soon.

This final rule will become effective 60 days after publication in the Federal Register.

There are other provisions outlined in Regulation Z under 1026.52 regarding limitations on fees that are not changing with this final rule, such as limitations during the first year after account opening and certain prohibited fees.

Credit unions should be on the lookout for these updates to be made within InfoSight and CU PolicyPro Model Policy 7210 – Credit Cards.

You can access the Credit Card Penalty Fees Final Rule and the Executive Summary here. Read the final rule here.

Access the ‘Compliance Hotline’
Your League-member benefits include the Compliance Hotline — providing exclusive access to dedicated compliance experts:

Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!

Additionally, other League-member compliance resources include:

  • ViClarity
  • CU PolicyPro
  • ComplySight
  • InfoSight
  • CU Store
  • Record Retention Guide
  • GRC Technology Solutions

For more information, email Lisa Quaranta.

Powered by ViClarity, a California and Nevada Credit Union Leagues company.

Become an Industry Supporter

Get membership information

Please contact me about compliance

Contact me about Credit Union Solutions

Education & Professional Development