Washington, D.C. — On Thursday, Demand Progress released a new report that exposes how the financial services industry has plowed around $200 million into advocacy efforts that are centered on blocking passage of the Credit Card Competition Act (CCCA), a bipartisan reform that would introduce competition into the payment system.
The report details how these efforts involve not only money spent on lobbying and campaign contributions, but aggressive and deceitful advertising and paid advocacy designed to convey the impression of grassroots support for the current system, which is enormously profitable for Visa, Mastercard and major banks that issue credit cards.
“For a combination of misleading claims and sheer financial firepower, Wall Street’s defense of credit cards really is something,” said Carter Dougherty, senior fellow for antimonopoly and finance at Demand Progress. “Visa, Mastercard and the big banks have money on their side but only vacant arguments, so this sort of campaign is the result.”
A glaring example of the industry’s astro-turfing is the Small Business Payments Alliance. The group, run by a New York public relations firm, spreads around videos of testimonials against reform from small businesses that have taken money from Visa and Mastercard. The industry has also engaged The Points Guy, a popular credit card website, in fighting change.
The report, entitled, “How Wall Street Money Misleads,” includes detailed evidence of how the credit card industry:
- Pumps money into political campaigns
- Spends heavily on lobbying in Washington and in states that have sought to pass incremental payment system reforms
- Uses advertising in select markets
- Bankrolls different groups and websites to convey widespread support for its position
The Credit Card Competition Act aims to introduce competition into the payment system by allowing merchants to route credit card transactions over networks other than Visa or Mastercard. In the Senate, Sens. Richard Durbin (D-IL) and Roger Marshall (R-KS) are sponsors. In the House, the sponsors are Reps. Zoe Lofgren (D-CA) and Lance Gooden (R-TX). The bill would apply provided the card was issued by a bank with more than $100 billion in assets, a threshold that covers the oligopoly of megabanks whose cards are used for most transactions. It enjoys the support from a wide array of consumer advocates, antimonopoly advocates and small businesses. A fact sheet on the CCCA can be found here.