On August 22, the CFPB filed a reply brief in support of its motion urging the U.S. District Court for the Northern District of Texas to dissolve the preliminary injunction and lift the stay on the CFPB’s late fee rule. As previously covered by InfoBytes, the District Court granted the plaintiffs’ motion for a preliminary injunction and stayed the CFPB’s final rule in May. The rule, promulgated earlier this year, would lower the safe harbor amount for credit card late fees from $30 (and $41 for a subsequent late fee charged within six billing cycles) to $8. In the recent reply brief, the CFPB argued that the rule was consistent with the CARD Act and TILA and that the plaintiffs, a group of national and local business and bank associations, failed to show how the stay would serve the public interest or why a 90-day compliance period would be appropriate. 

The CFPB made several points in its recent 13-page reply brief. First, it argued that the rule is “entirely consistent” with the statute, maintaining that the plaintiffs “overread” the CARD Act as permitting late fees to exceed the costs incurred for a late payment. The CFPB also contended that the plaintiffs were not entitled to a preliminary injunction because of TILA’s effective-date provision, which requires six months of lead time before certain TILA regulations can go into effect. Second, the CFPB urged the court to reconsider its finding that a preliminary injunction would serve the public interest, arguing that maintaining the current injunction would harm consumers. Lastly, the CFPB asserted that the plaintiffs’ arguments to impose a 90-day compliance period in the event the court lifts the stay were unpersuasive. 

This case has also been the subject of a venue dispute. The CFPB originally filed a motion to transfer the venue from Texas to the U.S. District Court for the District of Columbia, which was granted, but the U.S. Court of Appeals for the Fifth Circuit intervened (covered by InfoBytes here) and transferred the case back to Texas, where it remains (also covered by InfoBytes here).