Justice Dept to Scrutinise Legality of Debit Card Fees
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After a much publicised outcry, the American Department of Justice is now calling for a review to determine if banks violated antitrust laws in their concerted and unsuccessful attempt at imposing debit card fees.
In a letter made public on Tuesday, the U.S. Justice Department is “reviewing statements and actions by banks and their trade associations regarding possible increases in consumer fees for using debit cards.”
After a much publicised outcry, the American Department of Justice is now calling for a review to determine if banks violated antitrust laws in their concerted and unsuccessful attempt at imposing debit card fees.
In a letter made public on Tuesday, the U.S. Justice Department is “reviewing statements and actions by banks and their trade associations regarding possible increases in consumer fees for using debit cards.”
The review by the DOJ is largely seen as a warning to banks that are considering a fee hike to recoup lost revenues as a new legislation, the Durbin Amendment, effectively reduced the amount that retailers pay for debit card usage by almost 50 percent.
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“Please be assured that if it finds that individuals, banks or other parties may have violated the antitrust laws, the department will take appropriate action,” the Assistant Attorney General Ronald Weich wrote in a letter to Republican Congressman Peter Welch and other Democratic lawmakers.
[quote]The Department of Justice has a strong interest in ensuring vigorous competition among banks in the debit card services they provide to consumers, and in recent years, it has vigorously pursued both criminal and civil cases in this industry. For example, the Department criminally prosecuted a conspiracy to rig bids in the municipal bond derivatives market, which has thus far resulted in numerous executives being charged and hundreds of millions of dollars in criminal fines from banks, including JP Morgan Chase and Bank of America.
In addition, last year the Department filed civil antitrust enforcement actions against Visa, MasterCard, and American Express to enjoin rules by those networks that prevent merchants from offering consumer discounts, rewards, and information about card costs that ultimately resulted in consumers paying more for their purchases. We reached a successful settlement with Visa and MasterCard, and continue to actively prosecute the case against American Express. [/quote]
In September, it was reported that American banks such as Wells Fargo, Chase, Bank of America, SunTrust and Regions were mulling over the decision to impose a $3 to $5 monthly debit card usage fee.
“While big banks like Bank of America beat a hasty retreat on their debit card fee strategies, I have no doubt that they will continue their quest to dig deeper into the pockets of struggling consumers,” said Congressman Welch, who helped lead the push to include the debit fee limits in last year’s overhaul of financial regulations.
“As they consider their next move, they should be aware that there is a cop actively on the beat.”
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