Durbin-Marshall’s new provisions enable lawfare from state AGs

Even though President Trump unfortunately endorsed earlier this month the Credit Card Competition Act (CCCA) – a bill that attempts to force down fees that retailers pay to banks and credit unions for processing credit card transactions and, in turn, adds many costs for consumers – he may not be so keen on new provisions just added to the legislation. These new provisions would give massive new powers to state attorneys general, including blue-state progressives like New York AG Letitia James and Minnesota AG Keith Ellison, with whom Trump and center-right groups have many times come into conflict. These provisions also could become another tool in state AGs’ toolboxes for lawfare and weaponization.

Late last week – as many in DC and across the country were preparing for the incoming winter snowstorm – Sen. Roger Marshall (R-KS) filed a new version of the CCCA as an amendment to the cryptocurrency market structure bill slated for markup tomorrow in the Senate Agriculture Committee. Yahoo Finance reports that Marshall has now agreed not to offer the amendment at the vote after the White House made the case that it could jeopardize passage of the underlying bill.

Yet Marshall, who joined Sen. Dick Durbin (D-IL) to cosponsor the CCCA a few years back, did not promise to drop the noxious new provisions of the legislation and will likely continue to look for the next must-pass bill to which to attach it. The new provisions, as well as the legislative monstrosity’s overall harm to affordability that CEI has long highlighted, should make the White House reconsider its recent support.

As I and others at CEI have written, government attempts to force down the price of credit and debit card processing for retailers – through price controls or other mandates – shifts the costs to American consumers. My colleague Steve Swedberg recently wrote an excellent recap of the continuing harms to consumers from the original Durbin Amendment – Durbin’s measure attached to the 2010 Dodd-Frank financial overhaul that mandates price controls on debit card transaction interchange fees that retailers pay. Steve’s blog summarizes solid data showing that the Durbin Amendment has mostly benefited the nation’s largest retail chains, while harming lower- and middle-income consumers with higher bank fees and the loss of free checking for low-balance accounts.

Similarly, many scholars have found that, should the CCCA – also called Durbin-Marshall after its cosponsors – go into effect, there would likely be a dramatic reduction or even elimination of credit card rewards from cash-back dollars to airline miles used by middle-class consumers to manage family budgets.

Then there are the aforementioned provisions giving new powers to state AGs. As noted by Taxpayers Protection Alliance Executive Director Ross Marchand, “the revised Durbin-Marshall language imposes even more costs on the American people by empowering state attorneys general (AGs) with sweeping new enforcement authority.” These costs could include the enabling of lawfare and weaponization that led to widespread debanking of individuals and industry sectors in the Biden and Obama administrations.

The new CCCA, as in previous versions, contains complicated provisions by which retailers must be offered a second credit card network other than the one on the face of the card through which they may route transactions. Yet the new legislation also contains a new section giving enforcement powers for the provisions to state attorneys general.

Under the enforcement section, the new CCCA states: “Any attorney general of a State may bring a civil action in the name of such State, … to secure monetary relief for injury sustained by such natural persons to their property by reason of any violation of this section.”

Let’s recall when New York AG James sued to dissolve the National Rifle Association (NRA) and seize its assets at the same time the New York insurance commissioner pressured insurers to stop doing business with the NRA. In the latter case, the Supreme Court would eventually rule in NRA v. Vullo that such jawboning violated the First Amendment.

Similar lawfare could occur under the new CCCA provisions in a backdoor manner. The provisions, which contain no safeguards against weaponization and lawfare, could result in threats and punitive actions against banks and credit unions with personnel or clients that state AGs and their supporters simply don’t like. And this – as well as the financial threat to consumers – is why the CCCA should be DOA no matter which legislative vehicle it tries to ride upon.