Justice Department reviewing debit card fees
(Reuters) - The Justice Department is reviewing allegations by a U.S. lawmaker that U.S. banks and their trade associations may have coordinated increases in debit card fees in violation of antitrust laws.
Assistant Attorney General Ronald Weich said in a letter released on Tuesday, "The Department of Justice is reviewing the statements and actions by banks and their trade associations regarding possible increases in consumer fees for using debit cards."
"Please be assured that if it finds that individuals, banks, or other parties may have violated the antitrust laws, the department will take appropriate action," Weich said in a November 16 letter to Democratic Representative Peter Welch.
Welch in October called on the Justice Department to probe the banks.
He said public statements by big banks and trade groups -- including Wells Fargo and the American Bankers Association -- raised questions about whether financial companies have colluded on fee increases to make up for revenue lost because of a new cap on debit card swipe fees.
That controversial cap went into effect on October 1.
Banks initially defended the debit card fees, saying they had to make up for billions of dollars of lost revenue from retailers, but most scrapped them when faced with customer backlash.
"While big banks like Bank of America beat a hasty retreat on their debit card fee strategies, I have no doubt that they will continue their quest to dig deeper into the pockets of struggling consumers," Welch said in a statement on Tuesday. "They should be aware that there is a cop actively on the beat."
Bank of America had no comment and Wells Fargo and the ABA were not immediately available.
Separately on Tuesday, the National Retail Federation and other retail advocates said they filed suit against the Federal Reserve, which was tasked with setting fee caps under last year's Dodd-Frank Wall Street reform act.
In the lawsuit, filed in Washington D.C.'s U.S. district court, the NRF said the Fed bowed to pressure from banking industry groups and based its cap on costs banned from consideration by the law. The groups said the result has been that banks are still charging unjustifiably high swipe fees.
"The Federal Reserve was required by law to come up with swipe fees that were 'reasonable' and 'proportional,' but what we got were neither," said NRF Senior Vice President Mallory Duncan.
The Fed did not immediately respond to a request for comment.
(Reporting by Alexandra Alper in Washington, D.C.; Editing by Steve Orlofsky)