The American Bankers Association, along with seven other trade groups, recently commented on the Federal Reserve’s interim rule on the debit card fraud prevention adjustment, calling it too low.
In a letter to the Fed, the groups wrote that it supports the concept of complementing the fraud prevention adjustment provision of the Durbin Amendment but that a one cent adjustment is not enough to cover the actual costs that issuers pay for fraud prevention.
“Of particular relevance to this letter, one of the most important benefits of debit cards to merchants and consumers is that issuers-not merchants or consumers-absorb the substantial majority of fraud losses through guaranteed payments to merchants for properly authorized –in-person transactions and zero liability for consumers if their cards are lost or stolen or if the transaction is disputed,” the letter says, ABA.com reports. “By doing so, issuers allow consumers to use debit cards (and allow merchants to accept them) without general risk of incurring losses due to fraud.”
The groups urged the Fed to rectify the interim rule’s calculation of the fraud prevention adjustment and set the amount to at least four to five cents per transaction.
Other groups who signed the letter include The Clearing House, the Financial Services Roundtable, Consumer Bankers Association, the Independent Community Bankers of America, the Mid-Size Bank Coalition of America, the Credit Union National Association and the National Association of Federal Credit Unions.