A Texas judge granted an injunction blocking the rule from taking effect on Tuesday
of ConsumerAffairs
A judge in the U.S. District Court for the Northern District of Texas granted the banking industry an injunction that could cost bank customers$10 billion a year.
U.S. District Judge Mark Pittman granted a preliminary injunction against the rule, preventing it from taking effect May 14, as scheduled. The injunction was requested by the U.S. Chamber of Commerce and the American Bankers Association.
In making his ruling, the judge cited a 2022 ruling by the 5th U.S. Circuit Court of Appeals, which questioned the constitutionality of the Consumer Financial Protection Bureau, (CFPB), the federal agency that drafted the rule.
In March, the CFPBproposed a rule to limit the fees banks and other financial institutions impose on customers.
Specifically, the proposed rule would prohibit non-sufficient funds (NSF) fees on transactions that financial institutions decline in real-time. The rule would also have limited these overdraft fees to $8 instead of the type $32 dollar fees.
These types of transactions include declined debit card purchases and ATM withdrawals, as well as some declined peer-to-peer payments. The CFPBs proposal is part of the agencys proactive approach to protect consumers, and it would cover banks, credit unions, and certain peer-to-peer payment companies.
Over the years, large banks and their consultants have concocted new junk fees for fake services that cost almost nothing to deliver, CFPB Director Rohit Chopra said when the rule was first proposed. Banks should be competing to provide better products at lower costs, not innovating to impose extra fees for no value. The CFPB will continue to rid the market of junk fees today and prevent new junk fees from emerging in the future.
These fees are a significant part of bank profits. When the rule was announced, the U.S. Chamber of Commerce said it would sue the CFPB to prevent the rule from being implemented.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-05-11 11:37:05
