News Flash: Credit Card Companies Mistreat Consumers
Credit card companies and giant Wall Street banks keep finding more ways to get more money out of American consumers.
Keep in mind, they argue that they treat consumers better because of the big dollars they take from merchants in the form of swipe fees.
But swipe fees are up more than 50% just since 2020.
- Has that stopped the big banks from crushing consumers with higher interest rates and big fees? NO.
The latest evidence comes straight from the Federal Reserve. On Page 3 of the latest Fed report on debit cards (read it here), it shows how Visa and Mastercard have redirected who pays when a card is used fraudulently:
- Two years ago, the Fed reported that merchants had to pay 55.5% of the fraud while banks paid 36.3% and consumers paid 8.2%.
- The Fed’s latest figures show that merchants paid 47% of the fraud, banks paid 33.5% — and consumers had to shoulder 19.5% of the fraud!
- The credit card companies more than doubled the percentage of fraud that consumers had to pay in just two years!
Should we be surprised? Maybe not.
- The Fed’s report also shows that over the last two years the fraud rates on Visa and Mastercard transactions kept going up while the fraud rates on smaller competitor networks have gone down.
- Table 10 of that same report shows that Visa and Mastercard have a rate of fraud that is eight times higher than their smaller competitors (networks like Star, Pulse, NYCE, Accel, Shazam and others).
- The card companies keep crying that security will suffer if Visa and Mastercard have to compete for business — but that is blatantly false as the other networks have dramatically lower fraud rates already (and theirs are going down while Visa/Mastercard’s are going up).
It turns out Visa and Mastercard are terrible at avoiding fraud.
- But they are good at shifting it around — and making consumers pay a lot more of it than ever before.
- Apparently, that is the thanks we get for the anti-competitive spigot of swipe fees sending more billions of dollars their way every year.
Don’t be fooled, letting the credit card industry avoid competition and take more money means they just take more from everyone — consumers and merchants alike.