Law and regulation

Contrary to expectations, the Federal Reserve Board’s draft report on debit interchange did not resolve the debate on the cost of fraud in card payments.

For Visa Inc., MasterCard Worldwide and competing payments networks, a more critical provision than interchange pricing remains unresolved in the Federal Reserve’s proposed debit rules.

ATM manufacturers and operators saw a modest bump in their stock prices Dec. 16 following the Federal Reserve Board’s release of proposed rules that would dramatically restrict the interchange fees issuers receive for most debit card purchases.

WASHINGTON — The Federal Reserve Board's proposal to restrict interchange fees on debit cards came out much tougher than expected on Thursday, causing one industry representative to dub it "horrendous" policy and spurring a stock drop at the two largest payment networks (see proposal).

Discover Financial Services is banking on a mobile future. Executives at the Riverwoods, Ill.-based company said during a Dec. 16 conference call with analysts to discuss its fiscal fourth-quarter earnings that its deal with wireless carriers AT&T Inc., T-Mobile USA Inc. and Verizon Communications Inc. will play heavily in its future.

WASHINGTON — The Federal Reserve Board is considering a 12-cent fee cap on interchange fees for debit transactions as part of new regulations to rein in merchant costs of processing payments (see proposal).

WASHINGTON – The Federal Reserve this afternoon proposed rules aimed at lowering interchange fees on debit transactions that could cap fees at 12 cents per transaction, about what the current median cost of authorization, clearance and settlement is (see proposal).

Visa Inc. and MasterCard Worldwide impose restrictive and anticompetitive rules on merchants who accept their credit cards, the Competition Bureau is alleging in Canada in a Dec. 15 application with the country’s Competition Tribunal.

The Federal Trade Commission charged three debt-relief operations with making unsubstantiated claims to lure consumers nationwide into paying thousands of dollars in upfront fees, but failing to reduce credit card debts as promised, the agency announced in early December.

WASHINGTON — For the first time in its history, the Federal Reserve Board said Friday it would host a live webcast of an upcoming open board meeting.

Visa Europe this morning announced a settlement with the European Commission, agreeing to cap its weighted yearly average intraregional multilateral interchange rate for immediate debit transactions at 0.2% of the sale for four years. This represents a reduction of less than 20% for domestic interchange fees covered by the commitments, the card brand noted in a statement.

The Federal Trade Commission announced Monday it has banned a deceptive advertising operation from the debt-relief business under a $28.2 million judgment settlement.

Financial institutions looking to make up for revenue lost should debit card interchange rates dramatically drop next year could target what increasingly has become a thorn in their side: third party automated clearinghouse debits from their customers’ checking accounts, new research suggests.

Fifth Third Bancorp has agreed to pay $9.5 million in a proposed settlement with customers who claim they were improperly charged debit card overdraft fees caused by the bank’s policy of manipulating the sequence of posted transactions.

Colorado Attorney General John Suthers' office announced Wednesday it has filed a lawsuit against Denver-based Regent Asset Management Solutions Inc. and CEO Michael Scata for allegedly violating state consumer protection statutes.

Maryland regulators ordered a Kansas collection agency to stop doing business in Maryland after alleging the company repeatedly tried to collect on illegal payday loans - despite warnings to not do so.

Federal prosecutors have indicted six people in a $32 million international scam that victimized 80 attorneys in Alabama, Georgia, Massachusetts, Pennsylvania and Canada.

The Federal Reserve's forthcoming regulations on debit interchange may settle a long-running debate over whether fraud costs and risks are high enough to justify banks' current fees.

Less than one-fourth of consumers have signed up for debit card overdraft coverage from banks, and 70% say they want to continue to exercise choice in their debit-overdraft options, suggest the results of a survey Consumer Reports publisher Consumers Union released Nov. 16.

Mississippi Attorney General Jim Hood released a statement last week warning consumers about a potential debt collection scam in Mississippi, according to ACA International, the association representing collection agencies and creditors.