Durbin, Franken ask Yellen about card security
Feb. 18, 2014 – Sens. Dick Durbin, D-Ill., and Al Franken, D-Minn., have asked Federal Reserve Board Chair Janet Yellen to provide answers by March 12 to questions related to the Fed’s efforts to address payments security.
Noting the fraud adjustment portion of the Fed’s debit interchange rule, the two senators questioned what the Fed has done to ensure card issuers are actually implementing the policies and procedures they set to prevent fraud. They also asked whether the Fed Board believes oversight by federal agencies over the transition to EMV card technology would enhance fraud prevention.
In their request, sent in a Feb. 12 letter to the Fed chair, the senators also asked how many regulated debit card issuers receive the rule's fraud adjustment; whether regulators collect copies of the policies and related notifications; how often they address compliance; how many issuers have demonstrated their policies are “reasonably designed to take effective steps” against fraud committed electronically.
The request comes amid the ongoing lawsuit between the Fed and merchants over the debit interchange regulation. A federal appeals court has heard arguments, including from NAFCU and other amici asking that the Fed’s rule not be overturned, and could rule at any time.
NAFCU holds the Fed’s debit interchange fee cap to be too low, but a federal district court has ruled in favor of merchants’ argument that the fee is too high. Network non-exclusivity requirements are also targeted in the suit.
Letter from Durbin, Franken