WASHINGTON — Sen. Richard Durbin, who has loudly criticized banks for raising debit-card fees, accused Bank of America Corp. directly this week of attempting to drive customers toward credit cards.
The Illinois Democrat, who championed the cap in the Dodd-Frank Act on retailers' debit interchange costs, suggested in a letter to B of A chief executive Brian Moynihan that the bank's $5 month fee on debit users was meant to increase use of credit cards, which are not subject to the interchange rules. But Durbin said the law includes provisions to discourage such ploys.
"When drafting my legislation I anticipated that banks would push consumers toward credit cards, so I included a provision allowing merchants to offer discounts for debit versus credit," Durbin wrote. "This provision will help consumers at the cash register and also will constrain your and other big banks' efforts to steer customers toward credit cards with all their attendant tricks and traps."
In the letter, Durbin also asserted — as he did in a Senate floor speech Monday — that B of A will earn a windfall from its new debit-card fee. He stated in the letter that the Charlotte-based bank will earn more from the new $5 monthly fee than it will lose on the interchange cap instituted by the Federal Reserve Board, which implemented the interchange cap.
"I challenge you to provide specific and credible data that justifies imposing this monthly card fee," Durbin wrote. "If you cannot provide such data, I challenge you to do the right thing for your customers and reconsider your decision. Based on the data I have seen, your decision to charge this new fee cannot be justified by any reasonable measure."
But Trish Wexler, a spokeswoman for the Electronic Payments Coalition — a lobbying group consisting of banks, credit unions and payment card networks — said Durbin long ignored warnings that his legislation would lead to higher costs for consumers.
"The truth is that Senator Durbin knew that banks and credit unions across the board would have to raise prices," Wexler said in a press release. "Instead of heeding our warnings and protecting consumers, he chose to put millions of dollars into the pockets of giant retailers."
