Category Archives: Credit Cards

Senators Seek to Delay Debit Swipe Fee Regulations

A bipartisan group “of senators introduced a bill on Tuesday that would delay a new federal regulation to lower the swipe fees that banks could charge merchants for processing debit card transactions,” the New York Times reports.

Although there is growing uneasiness with the regulation, it is not at all clear the senators will succeed in upending the law, which easily passed the Senate last year and was a cause championed by a leading Democrat.

The latest bill, introduced Tuesday by nine senators led by Senator Jon Tester, a Democrat from Montana, calls for a two-year delay and a one-year study during that period of the effect of the proposed limits on debit fees.

The Dodd-Frank financial regulation bill, which became law last summer, directed the Federal Reserve Bank to determine the limits in April and put them into effect in July.

The proposed rules have faced complaints and heavy lobbying from banks, credit unions and credit card companies, which say that cutting and capping fees mean that the fees will fail to cover the cost of processing the transactions and accounting for fraud.

The Federal Reserve proposed cutting the fees to 12 cents a transaction, down from the current average of 44 cents a transaction.

Processing fees on debit and prepaid cards totaled $20.5 billion last year, according to the Nilson Report, a research firm.

A press release announcing the Debit Interchange Fee Study Act notes that Senators Bob Corker (R-TN), Jon Kyl (R-AZ), Ben Nelson (D-NE), Tom Carper (D-DE), Pat Roberts (R-KS), Chris Coons (D-DE), Mike Lee (R-UT) and Pat Toomey (R-PA) joined Tester in introducing the measure.

According to the New York Times, five of the “senators who co-sponsored Tuesday’s legislation opposed the debit fee limits when Senator Richard J. Durbin of Illinois pushed the original legislation through the Senate last year.”

However, Mr. Durbin’s support, along with the fact that his measure passed on a lopsided 64-33 vote last May, means that the nine senators could face an uphill battle to win enough votes to pass. Only one co-sponsor voted in favor of the amendment, and the other three co-sponsors were not Senate members at the time.

Wonk Room says Senator Ben Nelson is the member who originally supported the Durbin measure.

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Filed under Banks, Credit Cards, Federal Reserve

Grassley Introduces the Government Charge Card Abuse Prevention Act

Senator Chuck Grassley (R-IA) has introduced the Government Charge Card Abuse Prevention Act, according to a press release from his office.

The bill requires “federal agencies to put new safeguards and controls on government charge cards used by federal employees.”

It also requires “penalties for violations.”

Those safeguards and internal controls include:

  • performing credit checks for travel card holders and issuing restricted cards for those with poor or no credit to reduce the potential for misuse
  • maintaining a record of each cardholder, including single transaction limits and total transaction limits so agencies can effectively manage their cardholders
  • implementing periodic reviews to determine if cardholders have a need for a card
  • properly recording rebates to the government based on prompt payment, sales volume, etc.
  • providing training for cardholders and managers
  • utilizing effective systems, techniques, and technologies to prevent or catch fraudulent purchases
  • establishing specific policies about the number of cards to be issued, the credit limits for certain categories of cardholders, and categories of employees eligible to be issued cards
  • invalidating cards when employees leave the agency or transfer
  • establishing an approving official other than the purchase card holder so employees cannot approve their own purchases
  • reconciling purchase card charges on the bill with receipts and supporting documentation
  • reconciling disputed purchase card charges and discrepancies with the bank according to the proper procedure
  • making purchase card payments promptly to avoid interest penalties
  • retaining records of purchase card transactions in accordance with standard government record keeping polices
  • utilizing direct payments to the bank when reimbursing employees for travel card purchases to ensure that travel card bills get paid
  • comparing items submitted on travel vouchers with items already paid for with centrally billed accounts to avoid reimbursing employees for items already paid for by the agency
  • submitting refund requests for unused airline tickets so the taxpayers don’t pay for tickets that were not used
  • disputing unauthorized charges and tracking the status of disputed charges to proper resolution

Update (4/14): This measure has been approved by the Homeland Security and Governmental Affairs Committee.

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Filed under Credit Cards, Federal Employees

Republicans Object to Unanimous Passage of Dodd Credit Card Bill

Republicans on Wednesday “thwarted Senate Banking Committee Chairman Chris Dodd’s (D-Conn.) attempt to begin quick debate on his bill to freeze credit card interest rates and fees,” The Hill reports.

Dodd’s effort, introduced in October, builds off the reforms codified into law earlier this year by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act — another interest rate freeze bill Dodd authored.

However, the Democratic senator’s original effort was not tough enough to prevent credit card companies from scrambling to increase their fees while the law’s provisions went into effect, Dodd admitted back in October.

Under the new bill, rates would instead be immediately frozen, ending "those abuses and further protect[ing] customers," Dodd said in a statement describing the bill last month.

Senator Thad Cochran (R-MS) was on the floor to raise the Republican objection, noting that numerous members have issues with the bill.

Here is a video of the proceedings:

(credit image – getty)

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Dodd Introduces Bill to Freeze Credit Card Rates

Credit card rates “would be immediately frozen under new legislation introduced Monday by Senate Banking Committee Chairman Chris Dodd (D-Conn.),” The Hill reports.

Dodd will introduce the bill in response to concerns that the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, enacted earlier this year, has done little to block credit cards from raising interest rates before the remaining provisions of the CARD Act go into effect.

“We worked long and hard to enact the safeguards included in the Credit CARD Act,” Dodd said in a statement. “And no sooner had it been signed into law, but credit card companies were looking for ways to get around the protections this Congress and the American people demanded.  This bill would end those abuses and further protect customers today.”

“At a time when families are struggling to make ends meet, jacked up rates can quickly create crushing debt," Dodd added. "People need to be responsible with their money, but they shouldn’t be taken to the cleaners by outrageous rates.”

(credit image – getty)

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Rockefeller Issues Subpoena to Vertrue, Inc. in Credit Card Investigation

Senate Commerce, Science and Transportation Committee Chairman Jay Rockefeller (D-WV) “issued a subpoena Tuesday to compel the release of documents in an ongoing investigation into unauthorized credit card charges,” Congressional Quarterly reports.

The companies offer “cash back” or coupon rewards to consumers who enroll in their rewards programs. The offers typically occur as pop-ups after the consumer has purchased something from another Web site, including from some large retailers such as Priceline.com, Fandango.com and Staples.com. These retailers receive a payment from the discount club each time a customer enrolls.

The pop-up will ask for an e-mail address in order to opt into a rewards program, often in exchange for a fee outlined in fine print. Enrolling in the program then triggers an exchange of credit card information between the two businesses, without any action on the consumer’s part.

Consumer advocates say those who enroll in these programs may not be aware that their credit card will in fact be charged to enroll, since they aren’t asked to cough up a credit card number.

Rockefeller has asked for documents related to this practice from “post transaction marketers” Vertrue, WebLoyalty and Affinon, but so far has only subpoenaed Vertrue.

Vertrue President Gary Johnson “must produce the documents by Aug. 18 or he will be compelled to appear before the committee on that date for questioning.”

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