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As CUs Ramp Up Opposition to Bills, More Messages are Needed

Supporters are raising their voices in opposition to two devastating bills — one placing heavier liability on credit unions regarding elder financial abuse in California, and another in Congress that would make unfavorable changes to the credit card interchange system. But more messages to lawmakers are needed!

Ask CA Lawmakers to ‘Oppose SB 278 Unless Amended’
A couple weeks ago, the California Credit Union League asked credit union leaders and supporters to engage on Senate Bill 278, a bill dealing with elder financial abuse authored by State Senator Bill Dodd (D-Napa). California credit union supporters have sent more than 1,720 messages to California assemblymembers — but more messages from credit union supporters are needed.

The bill’s committee hearing has been pushed back, so NOW is the time to double-down and continue to push the message of opposition to SB 278 in the California State Assembly (unless the bill is amended).

Please have staff, board volunteers, and members send a message through Connect For The Cause! For those who’ve already sent a message, please send a second one.

SB 278 details:

  • SB 278 would significantly expand the liability of credit unions and even their employees in instances of elder financial abuse. As drafted, the bill applies to all transactions, contains personal liability for supervisors, and has a completely unworkable “safe harbor” that we feel will lead to a rapid erosion of senior members’ relationships with their credit unions. Your credit union will undoubtedly have some very upset senior members, so please ACT NOW to preserve your ability to serve them.
  • Credit unions have produced amendments we feel will lead to more prevention of fraud while not destroying the banking relationship between seniors and their credit unions. These amendments would focus on transactions over $10,000. They offer a safe harbor if a credit union implements ONE of the following actions: 1) a signed warning; 2) contacting a joint account holder; or 3) report and hold for 15 days. The final change would remove liability from the employee. If a credit union does not flag and try to stop the fraud, the liability should rest on the credit union — not the supervisor.
  • If you have any questions, email Leagues Senior Vice President of State Government Affairs Robert Wilson.

Ask Congress to Oppose Credit Card Interchange Bill
S. 1838 and H.R. 3881 (the Credit Card Competition Act) would severely impact credit unions and their members by changing the credit card interchange system. The California and Nevada Credit Union Leagues do not want to see consumers and credit unions losing out to big retailers, so please MAKE YOUR VOICES HEARD by sending a pre-written letter to your two senators and member of Congress, urging them to stand up for local credit union members by opposing this legislation.

So far, more than 8,330 messages have been sent to Capitol Hill from California and Nevada credit union supporters — part of the more than 20,000 sent from advocates nationwide.

The Leagues — in conjunction with the Credit Union National Association (CUNA) and fellow state leagues and associations — told congressional leaders in the U.S. House and Senate this past week that, far from increasing credit card competition, the interchange bill would hurt consumers and small businesses while benefitting big box retailers.

Meanwhile, CUNA also wrote to members of Congress in advance of restaurant industry lobby visits to Capitol Hill this past week, telling lawmakers that the current credit card interchange system “works.” It was anticipated these restaurant lobby visits would support the interchange bill that’s strongly opposed by the Leagues, CUNA, and fellow state leagues.

Here are key facts to remember as you spread the word with employees, volunteers, and credit union advocates:

  • The interchange system works. Interchange fees are only a fraction of a cent per dollar transacted. However, these fees are key to protecting consumer information. Interchange fees help pay for fraud detection, replacing credit cards and reimbursing fraudulent purchases. Based on a survey from CUNA, 95 percent of respondents say the current interchange system works and 92 percent want personal information secured from data breaches.
  • The Credit Card Competition Act would hurt your credit union. This bill would force card issuers to offer credit cards that can be processed on multiple networks, not just Visa or MasterCard. The bill takes power away from card issuers, like credit unions, and puts it in the hands of retailers and merchants. Vendors would have the option to choose what network a credit card transaction is paid on. This makes it harder for credit unions to predict revenues from credit card interchange fees. It also means that if a merchant chooses to use a poorly secured credit card network and there’s a data breach, credit unions may be forced to take a loss.
  • The Durbin Amendment from 2010 is a broken promise. The amendment set a cap on debit card interchange fees. Since then, there has been a 34 percent reduction in debit interchange revenues among credit unions. The broken promise of the Durbin Amendment is that merchants would pass savings along to consumers. Nevertheless, a survey conducted shortly after the implementation of the Durbin Amendment revealed that only 1.2 percent of merchants actually reduced their costs.
  • You can view the Credit Card Competition Act of 2023 Frequently Asked Questions (FAQ) sheet here, as well as the bill’s language here. You can also read a report released by Cornerstone Advisors: The True Impact of Interchange Regulation: How Government Price Controls Increase Consumer Costs and Reduce Security.
  • If you have any questions or issues, please email Leagues Senior Vice President of Federal Government Affairs Stephanie Cuevas.

The Credit Card Competition Act (CCCA) of 2023 is substantively identical to the CCCA of 2022, but with two notable changes:

  • The current CCCA adds that routing cannot be limited to two networks if any of the networks are included on the list of “designated national security risks” under Sub-paragraph D.
  • The current CCCA requires the list of “designated national security risks” to be updated every two years.

Under the current CCCA, the Federal Reserve would issue regulations requiring credit card issuers with more than $100 billion in assets to include at least two unaffiliated networks on which an electronic credit transaction can be processed. Additionally, the two networks cannot be the networks holding the two largest market shares of credit cards issued in the United States by licensed members of such networks (as determined by the Federal Reserve Board of Governors at the time the regulations are issued).

More information can be found on the cost of data breaches, how interchange fees protect consumers from data breaches, and the economic impact of amending interchange regulations by visiting the Interchange Works: Protect My Card site.

During the week of June 12 – 16, CUNA and organizations representing the entire financial services industry wrote House leaders in strong opposition of the interchange bill (H.R. 3881). The letter follows a similar one sent by the organizations to Senate leaders last week.

CUNA, along with the American Bankers Association, Association of Military Banks of America, Bank Policy Institute, Consumer Bankers Association, Defense Credit Union Council, Electronic Payments Coalition, Independent Community Bankers of America, Mid-Sized Bank Coalition of America, National Association of Federally-Insured Credit Unions, and National Bankers Association signed the letter.

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