15 U.S.C. § 1665d: Reasonable penalty fees on…

Summary

Credit card companies must set any penalty fee so it is fair and matches the type of mistake or rule broken. That covers late fees, going over the limit, and other penalty charges. The Consumer Financial Protection Bureau, working with the Comptroller of the Currency, the FDIC board, the Director of the Office of Thrift Supervision, and the NCUA Board, had to write final rules no later than 9 months after May 22, 2009. The rule that fees be fair started 15 months after May 22, 2009. When making rules, the Bureau must look at the creditor’s cost, whether the fee stops bad behavior, the cardholder’s conduct, and other relevant factors. The Bureau can make different rules for different fees and may set safe-harbor fee amounts that are presumed fair.

Title 15, §1665d

Commerce and Trade, Source: USLM XML via OLRC

(a)In general

The amount of any penalty fee or charge that a card issuer may impose with respect to a credit card account under an open end consumer credit plan in connection with any omission with respect to, or violation of, the cardholder agreement, including any late payment fee, over-the-limit fee, or any other penalty fee or charge, shall be reasonable and proportional to such omission or violation.

(b)Rulemaking required

The Bureau, in consultation with the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the National Credit Union Administration Board, shall issue final rules not later than 9 months after May 22, 2009, to establish standards for assessing whether the amount of any penalty fee or charge described under subsection (a) is reasonable and proportional to the omission or violation to which the fee or charge relates. Subsection (a) shall become effective 15 months after May 22, 2009.

(c)Considerations

In issuing rules required by this section, the Bureau shall consider—

(1)the cost incurred by the creditor from such omission or violation;

(2)the deterrence of such omission or violation by the cardholder;

(3)the conduct of the cardholder; and

(4)such other factors as the Bureau may deem necessary or appropriate.

(d)Differentiation permitted

In issuing rules required by this subsection, the Bureau may establish different standards for different types of fees and charges, as appropriate.

(e)Safe harbor rule authorized

The Bureau, in consultation with the Comptroller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the National Credit Union Administration Board, may issue rules to provide an amount for any penalty fee or charge described under subsection (a) that is presumed to be reasonable and proportional to the omission or violation to which the fee or charge relates.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Subsecs. (b) to (e). Pub. L. 111–203, § 1100A(2), which directed amendment of this section by substituting “Bureau” for “Board” wherever appearing, was executed by making the substitution for “Board” the first time appearing in subsecs. (b) and (e), and wherever appearing in subsecs. (c) and (d), to reflect the probable intent of Congress.

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

Effective Date

Section effective 9 months after May 22, 2009, except as otherwise specifically provided, see section 3 of Pub. L. 111–24, set out as an

Effective Date

of 2009 Amendment note under section 1602 of this title.

§1665d Reasonable Penalty Fees on Open End Consumer Credit Plans

Summary

Title 15, §1665d

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Effective Date

Citations & Metadata