Law and regulation

WASHINGTON – Credit union lobbyists were undeterred last week after the congressional conference to set the final bank reform bill opened with key lawmakers pledging to retain the controversial provision that would establish federal price controls over debit card interchange.

Industry consensus is mounting to suggest that some form of the debit-interchange amendment crafted by U.S. Sen. Richard Durbin, D-Ill., will be included in the reconciled financial-reform bill. But top payments-consulting firms continue to parse the amendment’s potential effects.

Editor's Note: The following is a release from attorney Sergei Lemberg. Collections & Credit Risk wants your reaction to his statements about the industry. Your responses will be published, upon your approval. Contact Darren Waggoner at darren.waggoner@sourcemedia.com or 815.463.9008.

In urging Congress to delete the interchange amendment from the pending bank reform bill credit union executives were put in an unusual position of arguing that an exemption – a so-called carve-out – from the amendment that they have sought in other bills is unworkable and impracticable.

Millions of dollars in ads are being printed and carried over the airwaves by credit unions and banks and their nemeses in the interchange amendment to the bank bill, the nation’s retailing groups, in the biggest credit union lobbying effort in more than a decade.

Hundreds of credit union executives criss-crossed the halls of Congress Wednesday in an effort to convince lawmakers to scrap the provision of the bank reform bill that would establish price controls over debit card interchange, but their efforts face great odds.

Industry groups continued their full-court press Wednesday to keep an interchange provision out of the final regulatory reform bill, but whether they could succeed was an open question.

U.S. Sen. Dick Durbin, D-Ill., on June 9 made a brief appearance before the Senate Judiciary Committee Subcommittee on Antitrust, Competition Policy and Consumer Rights, warning lawmakers of the need to investigate possible collusion between Visa Inc. and MasterCard Worldwide in the setting credit and debit card interchange rates.

Representatives from credit unions and community banks during a June 9 press conference in Washington, D.C., exhorted lawmakers to exclude the debit-interchange amendment from the final financial-reform bill, claiming that altering debit-interchange rules likely would force them to raise overall banking fees charged to consumers.

National Enterprise Systems (NES) Inc., a collection agency in Solon, Ohio, will pay $75,000 to settle illegal and abusive collection charges brought in a lawsuit by West Virginia's Attorney General's office.

Two Countrywide mortgage servicing companies will pay $108 million to settle Federal Trade Commission charges that they collected excessive fees from borrowers. The settlement is one of the largest judgments imposed in an FTC case, and the largest involving a mortgage servicer. The funds will be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by Bank of America in July 2008.

Lawmakers will return from their week-long Memorial Day recess this week right in the middle of a human scrum – hundreds of credit union executives crossing hundreds of retailers arguing over a key provision in the bank reform bill that would introduce government oversight of the market for cards interchange.

A Walt Disney World employee used skimming devices at several of the resort’s hotels to steal credit card information from guests, according to federal documents.

The final provisions of the Credit CARD Act take effect in August, but issuers are still in the dark about several key requirements that will affect how they calculate penalty fees.

West Virginia Attorney General Darrell McGraw announced that his office filed charges against four collection agencies in two lawsuits aimed at companies in Washington and New York for allegedly violating state consumer protection laws.

Small-business credit card issuers may continue skirting provisions of the Credit Card Accountability, Responsibility and Disclosure Act that went into effect earlier this year if regulators take the conclusions of a new Federal Reserve report to heart.

As lawmakers begin hashing out differences between the House and Senate regulatory reform bills next week, a big question is how hard proponents will fight for a stand-alone consumer protection agency.

Fair Debt Collection Practices Act lawsuits will spike this year to an estimated 11,750 cases – up from the record 8,287 cases in 2009, according to a forecast by one research firm.

In lobbying to defeat an amendment to the bank bill that would roll back interchange fees on debit cards credit unions are finding themselves in an increasingly familiar position – opposing the consumer lobby groups.

Nebraska state officials are warning lawmakers that the debit-interchange amendment in the Senate financial-reform bill could have grave implications for states using prepaid debit cards to disburse government benefits.