Fair Access to Banking | USIPS
The Unseen Hand: Why Current Laws Fail too protect Businesses from Payment Network Censorship
In the digital age, access to payment processing is not merely a convenience; it is a lifeline for businesses. Yet, a growing concern is the unchecked power of payment networks to arbitrarily deny services, effectively censoring legitimate businesses. While legislation exists to address such abuses, a critical examination reveals that current penalties are woefully inadequate, leaving businesses vulnerable and incentivizing inaction from regulatory bodies. This article delves into the shortcomings of existing laws, especially concerning payment services, and proposes essential reforms to rebalance power and ensure fair access.
The Weak Link: Examining the Penalties for payment Service Violations
A key piece of legislation, while aiming to curb unfair practices, contains a critical flaw in its enforcement mechanism when applied to payment services. Let’s dissect the relevant penalty structure:
b) shall be assessed a civil penalty by the Comptroller of the currency of not more than 10 percent of the value of the services or products described in that subsection, not to exceed $10,000 per violation.
This provision, particularly as it pertains to payment services, is demonstrably weak and, in practice, technically unenforceable against major players.
A Paltry Percentage of Damages: Card networks are only liable for a mere 10% of the damages they have demonstrably inflicted. This is a minuscule fraction of the actual harm caused.
an insignificant Cap: The penalty is capped at a mere $10,000 per violation. Consider that Visa alone processed an astounding $16 trillion in 2024. A $10,000 penalty for a violation impacting billions in transactions is effectively a rounding error.
Discretionary Enforcement: The penalty is imposed at the discretion of the Office of the Comptroller of the Currency (OCC). the OCC is not mandated to impose a penalty, nor are they required to seek the maximum amount. This discretionary power allows for potential inaction or leniency.
The Shadow of SEC v. Jarkesy: The Supreme Court’s 2024 ruling in SEC v. Jarkesy has significant implications. It established that agencies often cannot try cases before Administrative Law Judges (ALJs).This means the OCC would likely need to file suit in federal courts and pursue each violation through a jury trial. The cost and complexity of such litigation,especially against well-resourced card networks,would make pursuing penalties for any violation exceedingly difficult,and pursuing them for every instance almost certainly not worthwhile for the OCC.
What the act Should Do: Rebalancing the Scales
The nature of payment services is inherently financial.To create a meaningful deterrent against censorious behavior by payment networks, economic penalties must be substantial enough to impact their operations and provide direct recourse to those harmed. The current legislation falls far short.
To effectively address this imbalance, the act should be strengthened with the following provisions:
Direct Civil Relief for Injured Parties: The bill should empower directly impacted parties to sue in federal court without requiring prior permission from a regulatory body. This grants businesses agency and a direct path to justice.
Punitive Damages: In addition to full compensation for the value of services or products denied, the legislation should include punitive damages. This would serve as a true deterrent, punishing egregious behavior and discouraging future misconduct.
Attorney’s Fees and Costs: To ensure that legal recourse is accessible, prevailing injured parties should be awarded attorney’s fees and costs. This removes a significant financial barrier to seeking justice.Implementing these reforms would dramatically shift the balance of power away from the dominant card networks and their partners,restoring it to the legitimate businesses they serve. Such changes would create powerful incentives for card networks to:
Engage constructively with their customers.
Provide accessible and responsive human support.
Establish clear and fair appeal processes.
Prioritize swift resolution of disputes to avoid escalating damages.
These are the fundamental expectations that American businesses deserve from the financial infrastructure that underpins their operations.
Support This Bill, encourage Your Representatives
The fight for fair access to payment processing is ongoing. Your voice matters in shaping legislation that protects businesses from arbitrary censorship.
Contact Your senators: Visit senate.gov/senators/senators-contact.htm to find contact data for both of your state’s Senators.Urge them to support S.401 and to champion the inclusion of stronger provisions for civil relief, punitive damages, and attorney’s fees.
* Engage Your House Representative: Use