|
 |
Dayton Business Journal...
Call for Justice
Dept. probe of debit card fees
by Adam O’Daniel
Monday, October 17, 2011
Five U.S. congressmen are asking the Justice Department to investigate
new monthly debit-card fees that Bank of America and others will
soon charge.
The five Democrats, led by Vermont Rep. Peter Welch, sent a letter to
the Justice Department asking for an investigation to determine if the
banking industry violated antitrust laws by colluding to charge the
fees, creating an unfair marketplace.
“Statements made by individual banks and their trade associations raise
questions about whether some price increases that have occurred this
year have actually been coordinated,” the letter says, according to a
MarketWatch report. “This collective pricing activity is harmful to
competition and raises serious legal questions.”
BofA two weeks ago announced it would charge $5 per month beginning in
2012 to many of its debit-card users. SunTrust Bank will charge a
similar fee. Wells Fargo and Chase are charging fees in test
markets.
However, Citigroup has said it does not intend to add any fees
for using a debit card. And Fifth Third Bancorp , the largest
bank in the Dayton region, does not charge a monthly fee for debit-card
use.
The fees have been a populist rallying point for both Wall Street
protesters and many lawmakers, including President Barack Obama, who
said BofA was “mistreating” its customers by charging the fee.
However, bankers contend lawmakers are responsible for the fee because
of new regulations on the industry. A new rule that went into effect
this month caps the amount banks can charge merchants to process
debit-card transactions. The so-called swipe fees once averaged 44
cents per swipe. New rules cap the fees at an average of 21 cents per
swipe.
BofA - which has several home loan branches in the Dayton region - has
said that change will cost it $2 billion in revenue. The bank says the
monthly fee is an effort to recover that lost revenue.
Not all BofA customers will be charged the fee. Customers with platinum
checking accounts, mortgages or investment accounts with the bank will
be exempt. And customers who choose to use the card only at BofA ATMs
or stop using the card won’t be charged the fee.
BofA on Friday referred reporters to the Electronic Payments Coalition,
a banking industry lobbying group that opposed the cap on debit-card
swipe fees and supports a bill seeking a repeal of the new rules.
Spokeswoman Trish Wexler says the cap on swipe fees “was forced into
law despite repeated warnings from consumer advocates, regulators and
economists on the dire consequences that await consumers. We now see
this unfortunate situation for consumers playing out in the form of
higher costs to own and use a debit card.”
Meanwhile, many banks and credit unions have seized the opportunity to
steal business from larger rivals. Smaller lenders have advertised free
debit cards and even offered cash payouts for customers who open new
accounts.
Adam O’Daniel is finance editor for the Charlotte Business Journal, an
affiliated publication of the Dayton Business Journal.
Read this and other articles at Dayton Business Journal
|
|
|
|
