The Consumer Financial Protection Bureau is scrutinizing fees charged by financial institutions that it says are problematic.
Photo: Daniel Acker/Bloomberg News
WASHINGTON— President Biden plans to announce Wednesday that his administration is proposing a rule that would limit the late fees credit-card companies can charge, bringing penalties down to $8 from as much as $41 for a missed payment, according to the White House.
The rule being put forward by the Consumer Financial Protection Bureau could go into effect as early as 2024, administration officials said, and doesn’t require congressional approval.
Mr. Biden will announce the proposed late-fee cap and other measures that his administration is advocating to reduce fees when he meets with his Competition Council, a group of cabinet members and other administration officials.
The CFPB is making a broad push to crack down on what it describes as problematic fees charged by financial institutions.
“Many Americans believe these fees are just plain wrong,” CFPB director Rohit Chopra said Tuesday in a preview of the late-fee proposal.
Mr. Chopra said the CFPB has the authority to amend the rules under the 2009 Credit Card Accountability Responsibility and Disclosure Act. He said the current rules allow credit-card companies to charge high fees and increase them to account for inflation.
Companies now charge up to $30 for the first late payment and $41 for additional late payments, the CFPB said. Americans pay about $12 billion in credit-card late fees each year, Mr. Chopra said.
Industry lobbyists have said issuers have worked to ease burdens on struggling borrowers while complying with federal law.
Mr. Biden for 36 years represented some of the country’s largest financial institutions as a senator from Delaware and was called “the senator from MBNA” by some critics, in reference to the credit-card company founded in the state. He clashed with consumer advocates including now-Sen. Elizabeth Warren (D., Mass.) over a 2005 law supported by the credit-card industry that made filing for bankruptcy more expensive. He later endorsed Ms. Warren’s proposal to undo parts of that law.
On Wednesday, Mr. Biden is also expected to release a report calling on Apple Inc. and Alphabet Inc.’s
Google to ease restrictions on their app stores so that more companies can participate in mobile-app markets.
The report, from the Department of Commerce’s National Telecommunications and Information Administration, will say that “the current mobile app store model is harmful to consumers and developers,” according to a news release.
Mr. Biden will also call on Congress to cut what White House officials term “junk fees,” including those that airlines charge parents who want to be sure they are seated next to their children.
Mr. Biden also wants Congress to eliminate fees that consumers pay when they want to change their phone service, a penalty that can be up to $200, the White House said. And he wants lawmakers to erase the “resort fees” that hotels charge when booking some locations.
Administration officials said Mr. Biden believes there will be bipartisan support for ending many of those fees.
Write to Annie Linskey at annie.linskey@wsj.com
Source: wsj.com