First Premier Bank and Premier Bankcard are suing the Federal Reserve System and the Consumer Financial Protection Bureau over new credit card rules that go into effect in October.
First Premier is challenging amendments that the Fed approved to the 2009 CARD Act that established strict price controls for credit cards issued to consumers with bad credit, KeloLand.com reports.
The Fed said credit card companies were trying to get around the initial rules in the CARD Act that only capped total fees in the first year of the account. The amendments closed loopholes so the law now says that any application fee or other charges a consumer is required to pay before an account is opened counts toward the limit on first year fees.
First Premier said the new requirements prevent them from taking the risk on consumers with bad credit, KeloLand.com reports. If First Premier wins the lawsuit and overturns the regulations, the company said it will be able to price its credit cards based on risk, allowing consumer to decide whether or not they want to pay those fees.
First Premier also said the new regulation is responsible for the closing of its Spearfish facility, which cut its South Dakota staff in half to just 1,500 employees.