Biden forms strike force against ‘unfair pricing,’ caps credit card late fees

President Biden on Tuesday formed a strike force to crack down on unfair or illegal pricing by corporations and finalized a rule capping the average credit card late fee at $8 instead of $32, offering a preview of the economic plank of his State of the Union address.

The Strike Force on Unfair and Illegal Pricing will be co-led by the Department of Justice and the Federal Trade Commission as Mr. Biden, facing reelection, tries to allay concerns about inflation and other pocketbook issues.

“If you keep prices high while engaging in illegal practices that are fraudulent or unfair or deceptive or anti-competitive, we will enforce the law,” Mr. Biden said in a White House meeting of his Competition Council.

The U.S. and other nations confronted stubborn inflation after COVID-19 scrambled supply chains, though Republicans say Mr. Biden threw fuel on the domestic problem with excessive government spending — including extra stimulus payments directly to Americans.
Mr. Biden said corporate scheming is to blame at this point.

“It’s time for those prices to come back down,” Mr. Biden said. “Even as supply chains are back to normal, some companies are still not passing along the savings to their customers.”

Separately, the administration said the late-fee rule from the Consumer Financial Protection Bureau will save credit card holders $10 billion per year, or around $220 annually for each of the roughly 45 million people who are charged late fees.

The CFRB said laws from the 2009-2010 period capped fees at no more than $25 for the first late payment, and $35 for subsequent late payments, though those amounts could be adjusted for inflation. They’ve ballooned to $30 and $41.

Regulators said banks took advantage of creeping increases even as the digital age made their internal processes more efficient and inexpensive, the administration said.

“Today’s rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines,” said CFPB Director Rohit Chopra.

High everyday costs are joining the president’s advanced age and unchecked migration at the border as the main barriers to Mr. Biden’s reelection bid in a likely rematch against former President Donald Trump.

Mr. Biden has repeatedly deflected the criticism onto corporations, saying they are price-gouging, imposing unfair fees or guilty of “shrinkflation,” in which goods get smaller while prices stay the same.

“When they charge you just as much for the same size bag of potato chips only there’s a hell of a lot fewer chips in there,” Mr. Biden said.

Mr. Biden is expected to highlight the strike force and efforts to slash fees in his speech to Congress late Thursday.

Rep. Patrick McHenry, North Carolina Republican and chairman of the House Financial Services Committee, said Mr. Biden was weaponizing financial regulators to “play politics in an election year.”

“Just days before the State of the Union, it is clear that this Administration plans to take a ‘victory lap’ at the expense of American consumers,” he said. “This calls into question the composition and motivation of this rule making.”

The American Bankers Association is opposing the late-fee rule, saying it will increase banks’ costs and force them to reduce credit lines or tighten standards for new accounts.

Republicans said the regulation is a sweet-sounding move that will distort the banking system.

“While lowering the cap on late penalties may sound like a good talking point, in practice, it will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board,” Sen. Tim Scott, South Carolina Republican and the ranking member on the Senate Banking, Housing and Urban Affairs Committee.

“Lawful and contractually agreed upon payment incentives promote financial discipline and responsibility,” he said.