Visa and Mastercard say that it is the responsibility of banks to take direct action against fraudsters, rarely using the tools they have at their disposal to prevent consumer harm. But lawmakers say this isn’t good enough.
“It may be technically true that they don’t have an obligation, but it’s a pretty pathetic commitment to the public good of their customers,” Rep. Peter Welch, a Democrat who represents Vermont, recently told BuzzFeed News. “Visa and Mastercard actually have the data that puts them in a unique position where they can decide to act to protect consumers against fraud — or they can ignore it and make more money.”
Welch has long been an advocate for legislative reform of credit card companies to limit the fees they set for using their networks, noting that the United States faces the highest rates in the world. In March, he penned a letter with Democratic Sen. Dick Durbin of Illinois asking Visa and Mastercard executives to not raise the so-called interchange fee rates during the pandemic.
Durbin told BuzzFeed News in a statement earlier this week that Visa and Mastercard’s failures on consumer harm are “the kinds of problems and misbehavior that can arise in a broken market when dominant companies don’t feel competitive marketplace pressures. That needs to change.”
In 2009, Durbin was successful in setting a cap on debit card fees through legislation referred to as the Durbin amendment. An earlier version of the proposal, which included a cap on credit card fees as well, did not succeed.
Welch said in an interview with BuzzFeed News that the credit card industry is “extremely powerful,” making new legislation difficult, but added that “there has to be some regulatory oversight here.”
Another legislator, Democratic Rep. Jan Schakowsky of Illinois, called the findings of BuzzFeed News’ investigation “troubling,” saying in a statement that the Biden administration “must consider all legal remedies — whether they be derived from consumer protection, banking, or antitrust laws.”
Schakowsky is chair of the consumer protection subcommittee on the House Committee on Energy and Commerce. “If these laws aren’t adequate, Congress should be eager to ensure that this regulatory loophole is closed swiftly,” she added.