Durbin

Yesterday Parkmobile informed its D.C. subscribers that transaction fees for the pay-by-phone parking app would be jumping from 32 to 45 cents, an increase it blamed on an amendment offered by Sen. Dick Durbin (D-Ill.) to the landmark Dodd-Frank financial regulation bill. Today, Sen. Durbin had something to say about that—bullshit.

In a letter sent to Parkmobile CEO Albert Bogaard, Durbin said that maybe the pay-by-phone parking app should focus its ire on the two credit card companies most immediately responsible for increasing transaction fees on businesses:

Your company’s email and press release incorrectly blame the Durbin Amendment for increasing your processing fees. My amendment did not raise these fees, it put a ceiling on them. Visa and MasterCard raised your fees, and as a merchant you were helpless to stop them short of the ceiling the new law created,” Durbin wrote. “The decision whether or not to increase transaction “swipe” fees rests with Visa and MasterCard alone. The Durbin Amendment was crafted to put a limit on exactly the type of unreasonable swipe fee increases that you lament. Blaming the Durbin Amendment for Visa’s and MasterCard’s decision to raise your fees is like blaming a traffic cop for a driver’s decision to speed and drive recklessly.”

To a certain extent, Durbin is right. His amendment was supposed to lower the amount that banks could charge businesses to process debit card transactions. But in response, MasterCard and Visa did away with discounts they offered merchants for small transactions—hence Parkmobile saying it would hike its own transaction fees.

That’s not all, of course. Durbin took aim at Mayor Vince Gray, saying that he shouldn’t have allowed the D.C. Department of Transportation—which contracts with Parkmobile—to make the link between the amendment and the transaction fee increases.

“[I]t is inappropriate for a contractor, using District resources, to offer up incorrect, unsolicited legislative analysis while hiding behind poorly reasoned excuses for their own price hikes,” wrote Durbin. “What’s next? Emails to District residents from contractors opining on the Affordable Care Act? Press releases blaming higher school lunch prices on the Farm Bill?”

To counteract the fee increase, Parkmobile has started offering a new service, Parkmobile Wallet, which allows users to pre-load their accounts like they would a SmarTrip card. That way, Parkmobile only pays a fee once—when the account is charged—instead of every time a user parks their car.

Durbin’s full letter is below:

October 26, 2012

Albert Bogaard, CEO
Parkmobile USA Inc.
3200 Cobb Galleria Pkwy
Ste 100
Atlanta, GA 30339

Dear Mr. Bogaard:

On October 25, a Parkmobile marketing and sales support manager sent a grossly misleading email to Parkmobile customers in the District of Columbia. The email claims that “Beginning October 29th, transaction fees in DC will increase from $0.32 to $0.45 due to increased costs triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin Amendment.”

This email follows a press release that Parkmobile issued on October 23 (“Parkmobile USA, Inc. introduces the Parkmobile Wallet in the District of Columbia”) in which you claim that a new Parkmobile product “offer[s] a relief from the impact of recent federal legislation passed by Congress.”

Your company’s email and press release incorrectly blame the Durbin Amendment for increasing your processing fees. My amendment did not raise these fees, it put a ceiling on them. Visa and MasterCard raised your fees, and as a merchant you were helpless to stop them short of the ceiling the new law created. Instead of honestly telling this story, you decided to side with the credit card giants and refuse to tell your customers what really happened. So, I ask that you retract these misleading communications and provide your customers with a clarification that sets the record straight.

The decision whether or not to increase transaction “swipe” fees rests with Visa and MasterCard alone. The Durbin Amendment was crafted to put a limit on exactly the type of unreasonable swipe fee increases that you lament. Blaming the Durbin Amendment for Visa’s and MasterCard’s decision to raise your fees is like blaming a traffic cop for a driver’s decision to speed and drive recklessly.

Additionally, your company has shown a fundamental lack of understanding about what the Durbin Amendment actually does. Your press release quotes a local official who endorses Parkmobile’s new product because “changes outside our control have caused credit card fees to rise.” The Durbin Amendment did not regulate credit card fees; it only regulated debit card fees on certain transactions.

Visa, MasterCard and their big bank allies have made tens of billions each year by charging American businesses like yours unreasonably high swipe transaction fees. The Durbin Amendment took a modest step toward reining in this unfair swipe fee system because high swipe fees harm consumers and businesses alike. The fact that Visa and MasterCard are still able to impose unreasonable swipe fee increases on some debit and all credit card transactions is not an indictment of the Durbin Amendment, but rather shows that more must be done to rein in Visa and MasterCard’s unfair swipe fee system. Instead of criticizing my efforts to stop Visa and MasterCard’s abusive fee increases, I urge you to instead join those efforts. Your business and your customers will be better served if you do.

Sincerely,

Richard J. Durbin
United States Senator

Cc: Mayor Vincent C. Gray