CFPB Fall 2023 Rulemaking Agenda Indicates Imminent Issuance of Final Credit Card Late Fees Rule and Proposed Rules on Overdraft and NSF Fees

The CFPB has released its Fall 2023 rulemaking agenda as part of the Fall 2023 Unified Agenda of Federal Regulatory and Deregulatory Actions.  The agenda’s preamble indicates that “[t]he Bureau reasonably anticipates having the regulatory matters identified [in the agenda] under consideration during the period from November 2023 to October 2024.”

Most notably, the new agenda indicates that the CFPB is expecting to release three major rulemaking items this month: a final rule on credit card late fees and proposed rules on overdraft and non-sufficient funds (NSF) fees.  (Although the agenda includes an estimated December 2024 date for issuance of a final rule on credit card late fees, in his recent testimony to Congress, Director Chopra stated that the final rule would be issued in January 2024.)  In May 2023, the CFPB proposed significant amendments to the Regulation Z rules on credit card late fees, including substantially reducing the safe harbor late fee amounts that card issuers can charge and eliminating annual inflation adjustments.  

The CFPB has acknowledged in recent reports and elsewhere that as a result of changes made by many banks to their overdraft and NSF fee practices, revenues from those fees have substantially declined.  Nevertheless, the CFPB apparently has decided to proceed with rulemaking.  (Although the agenda suggests that the overdraft fee rulemaking will be limited to the  question of when an overdraft fee constitutes a finance charge under the Truth in Lending Act and Regulation Z, many observers believe that the proposed rule will be much broader in scope.) 

The other ongoing rulemakings listed in the agenda are:

• Registry of nonbanks subject to certain enforcement orders.  In December 2022, the CFPB issued a proposed rule that would require certain “covered nonbanks” to register with and submit information to the CFPB when they become subject to certain orders from local, state, or federal agencies and courts involving violations of certain consumer protection laws.  The Bureau gives a March 2024 estimate for issuance of a final rule.
  
  
• Registry of nonbanks regarding standard form contract terms and conditions.  In January 2023, the CFPB issued a proposed rule to establish a system for the registration of nonbanks subject to CFPB supervision that use “certain terms or conditions that seek to waive consumer rights or other legal protections or limit the ability of consumers to enforce their rights,” with arbitration provisions among the terms that would trigger registration.  The Bureau gives a March 2024 estimate for issuance of a final rule.
  
  
• Larger participants in consumer payments market.  In November 2023, the CFPB issued a proposed rule to supervise nonbank companies that qualify as larger participants in a market for “general-use digital consumer payment applications.”  It would cover providers of consumer financial products and services that are commonly referred to as “digital wallets,” “payment apps,” “funds transfer apps,” and “person-to-person or P2P payment apps.”  The Bureau does not give an estimated date for further action.
  
  
• Personal Financial Data Rights.  In October 2023, the CFPB issued a proposed rule to implement Section 1033 of Dodd-Frank which addresses consumers’ rights to access information about their financial accounts.  The agenda indicates that the comment period ends on December 29, 2023, which is the last day of the 60-day comment period.  Fifteen trade groups wrote to the CFPB on October 27 to ask for a 30-day extension of the comment period.  The Bureau does not give an estimated date for further action.
  
  
• Fair Credit Reporting Act.  The agenda states that the Bureau is considering whether to amend Regulation V (which implements portions of the FCRA).  In September 2023, the CFPB announced that it waslaunching a FCRA rulemaking and issued an outline of the proposals it is considering in preparation for convening a Small Business Advisory Review Panel.  A group of consumer financial industry trade groups recently sent a letter to Director Chopra urging the CFPB to issue an Advanced Notice of Proposed Rulemaking before it publishes a Notice of Proposed Rulemaking.  In the agenda, the Bureau designates the rulemaking to be in the “prerule stage” and estimates pre-rule activity in December 2023 but does not indicate that a SBREFA outline was issued.
  
  
• Amendments to FIRREA Concerning Automated Valuation Models.  In June 2023, the Bureau, together with the federal banking agencies and the FHFA, issued a proposed rule on automated valuation models.  The Bureau gives a June 2024 estimate for issuance of a final rule.
  
  
• Property Assessed Clean Energy Financing.  In May 2023, the CFPB issued a proposed rule that would extend TILA ability-to-repay requirements to PACE transactions.  The Bureau gives an October 2024 estimate for issuance of a final rule.
  
  
• Mortgage servicing.  The agenda indicates that the CFPB is considering ways to simplify and streamline the mortgage servicing rules.  The Bureau gives a March 2024 estimate for issuance of a Notice of Proposed Rulemaking.
  
  
• Financial Data Transparency Act.  The agenda indicates that the CFPB is working with the Department of the Treasury, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the National Credit Union Administration to develop a proposed rule to establish data standards for the collection of information reported to each of the agencies by financial entities under their respective jurisdiction and the data collected from the agencies on behalf of the Financial Stability Oversight Council.  The CFPB gives a June 2024 estimate for issuance of a Notice of Proposed Rulemaking and a December 2024 estimate for issuance of a final rule.

In addition to the ongoing rulemakings listed in the CFPB’s agenda, the agenda includes one long-term rulemaking item, Regulation DD (which implements the Truth in Savings Act).  The CFPB observes that Regulation DD currently allows depository institutions to disclose that a variable interest rate is set at the institution’s discretion.  It states that because many institutions make such a disclosure, comparison shopping on variable rate deposit accounts is made difficult for consumers and institutions can potentially delay increasing rates paid to consumers when the Federal Reserve raises its interest rates.  The CFPB indicates that it is reviewing whether changes to Regulation DD are needed in light of current market conditions.  It gives no estimated date for future action.

It is a virtual certainty that the CFPB’s final rule on credit card late fees will face a legal challenge and other final rules, such as the CFPB’s final registry rules, are also very likely to face legal challenges.  Moreover, the validity of all CFPB rules could be in jeopardy if the U.S. Supreme Court rules in the CFSA case that the CFPB’s funding mechanism is unconstitutional.