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In Washington, sometimes the facts get in the way of a good story when it comes to advocating for changes to public policy. Eventually, the facts have the pesky ability to expose the cold hard truth of a well-spun fairy tale. This is what happened when price controls were enacted on debit card transactions and consumers suffered as a result. An amendment authored by Senator Durbin was attached to Dodd-Frank and passed in the dead of night with little scrutiny or debate. The provision, which dictates price controls on debit card transactions, was hailed as a consumer benefit because advocates said that the money it generated would go directly back into the pockets of hardworking Americans. Continue Reading
While few senators attended the Senate Banking Committee’s hearing on the effects of consumer finance regulations, Senate Democrats blasted Senate Republicans for trying to kneecap the CFPB and questioned one witness’ judgement about the agency at Tuesday’s event. During his opening statement, ranking member Sherrod Brown (D-Ohio), chided the committee’s Republicans for having forgotten the recent financial crisis and the reasons why the CFPB was developed. He told committee members to resist the collective amnesia in the hearing room and in Congress. Continue Reading
EPC To Fed Chair: Durbin Amendment Rewards Retailers $36 Billion in Additional Profits, But Provides No Relief to Consumers
Electronic Payments Coalition Executive Director Molly Wilkinson today wrote Fed Chair Janet Yellen to express concerns regarding the detrimental effect the Durbin amendment is having on consumers. In the letter, which was submitted pursuant to the regulatory review being conducted under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), Wilkinson details how the Durbin amendment never fulfilled its promise of lowering costs to consumers at checkout, but has instead allowed retailers to pocket approximately an additional $36 billion in profit. Citing a recent August 2015 Federal Reserve Bank of Richmond study, Wilkinson notes that few merchants are found to reduce prices or debit restrictions as debit costs decrease. In another survey 92% of the nearly 2000 consumers questioned reported that prices rose or stayed the same over the previous year. “…[this] study confirms what common sense and economic theory tell us – that is, retailers never had any … Continue reading
Retailers are once again making the rounds on Capitol Hill this week asking for another handout from Congress. Despite their annual $8 billion windfall—a direct result of the last-minute Durbin Amendment to the Dodd-Frank Act—they are looking for even more money under the false pretense that consumers will benefit. It’s an empty promise, and we’ve heard it many times over. Continue Reading.
Sen. Dick Durbin, D-Ill., slipped into the monstrous 2010 Dodd-Frank financial regulation bill a favor long sought by big-box retailers, such as Wal-Mart. The Durbin amendment, as it is known, imposed price controls on interchange fees for debit cards. Interchange fees are what banks and card issuers charge retailers for processing payments. Many consumers prefer to use cards instead of cash, so it’s advantageous for retailers to provide that as an option.
Inside the Beltway, a battle has been raging for close to a decade pitting retailers against America’s credit card companies, better known as Visa V -0.38%, MasterCard MA +0.00% and American Express AXP +1.43%. The fight has occurred on different fronts ranging from cyber-security to interchange fees, the fees retailers pay to allow customers to use credit cards. In 2010, with the enactment of the Dodd-Frank bill, which contained a retailer desired cap on debit card fees, many believed the retailers would declare victory and go home but it appears they are back seeking another bite at the crony capitalist apple.
If you’ve ever had a credit card number stolen, you know what a serious pain it can be. Losing a card to fraud can be the simple annoyance of your card being cancelled by the watchful credit card issuing company and having to wait for a new card to a full out identity theft which can cost thousands. How are cyber thieves stealing the card numbers? The main way for thieves to get your information comes from beaching the older large department stores’, or “Big Box Stores,” often-antiquated technology. A customer’s single biggest vulnerability for identity theft and credit card fraud is using your card at major retail stores that have repeatedly been breached by hackers. These stores use outdated kiosk computers to process sales. These retailers have allowed clever thieves to install viruses that silently relay customers’ credit card info back to them. This is how Target negligently lost … Continue reading
Sen. Richard Durbin (D-IL), who was wrong about price controls on interchange fees on credit and debit card transactions fives years ago, now sides with the big box stores in pushing for ineffective “chip and pin” protections on credit and debit cards. Durbin is hardly an expert on these issues, but he surely is bought and paid for by retailers. While it’s claimed the lack of these features makes us vulnerable to fraud, the single biggest vulnerability is for identity theft and credit card fraud in your name: it’s using your card at major retail store that have repeatedly been breached by hackers. Contrary to what credit card security expert Durbin claims, more than chip and pin is needed to ensure security of our credit and debit cards. Using outdated kiosk computers to process sales, retailers have allowed clever thieves to install viruses that silently relay customers’ credit card info … Continue reading
Sen. Dick Durbin hates free markets but loves crony capitalism. Durbin has carried water for big box retailers for years and was successful in enacting a measure to force price-controls on interchange fees for credit cards — a measure that helped his friends in retail at the expense of consumers. Now Durbin is at it again, pushing a measure he argues will cut down on credit card fraud but is, in reality, nothing more than window dressing for the stores have provided hundreds of millions of credit card numbers to cyber thieves. It’s no secret that the retail stores have become juicy targets for crooks looking to steal credit card numbers. Target’s computer system was breached and 70 million credit card numbers were stolen in one feel swoop. Home Depot was responsible for 56 million credit cards being stolen. Rather than work with security experts and credit card companies, the … Continue reading
This week marks the fourth anniversary of the “Durbin amendment,” a defective law directing the Federal Reserve to impose price-controls on debit interchange fees. Slipped into the Dodd-Frank financial reform bill at the eleventh hour, the amendment has resulted in billions of dollars in revenue for merchants and not even a Slurpee of savings for consumers. Big-box retailers like Target, Walgreens, Home Depot, and Walmart promised Congress they would pass their savings — about $8 billion annually — to consumers in the form of lower prices. From the beginning, critics of the law, including consumer groups, predicted that retailers would pocket these savings instead.