A lobbying group for banks, credit unions and card networks is accusing Sens. Dick Durbin, D-Ill., and Roger Marshall, R-Kan., of attempting to silence opposition to their credit card swipe-fee legislation.
On Monday, the two senators asked the Consumer Financial Protection Bureau and the U.S. Department of Transportation to investigate airlines for purportedly unfair practices in their loyalty programs.
The letter came after the CEO of United Airlines criticized the Credit Card Competition Act, which is co-sponsored by Durbin and Marshall. The bill would change the rules around the fees that merchants pay to banks when they accept credit cards.
Richard Hunt, executive chairman of the Electronic Payments Coalition, said in a statement Tuesday that the timing of the senators' letter is not a coincidence. "It is, however, a calculated attempt to try to silence and intimidate any U.S. company or American worker who opposes their harmful legislation," Hunt said.
The coalition said it is worried that Durbin and Marshall are trying to "weaponize the government" against businesses or groups that push back on the proposed mandates on credit-card routing.
"What's next? Telling the IRS to subpoena the tax returns of Illinois and Kansas voters who contribute to their opponents?" Hunt, the former longtime president and CEO of the Consumer Bankers Association, said in a separate statement.
In their letter, Durbin and Marshall accused airlines of engaging in "unfair, abusive and deceptive practices" in their frequent flyer and loyalty programs. The two senators wrote that airlines have changed their point systems "in ways that are unfair to consumers, including by devaluing points."
"Airlines can make changes to their points programs without notice to consumers, as long as the programs' terms of service reserve the right to do so," the senators wrote. "As a result, these programs incentivize consumers to purchase goods and services, obtain credit cards and spend on those credit cards in exchange for promised rewards — all while retaining the power to strip consumers of those rewards at any moment."
When asked Tuesday for comment about the Electronic Payments Coalition's statements, a Durbin spokesperson said: "I think our letter speaks for itself."
The long-simmering fight in Washington over credit card swipe fees was renewed in June, when a bipartisan group of lawmakers led by Durbin
The legislation failed to pass when it was
The legislation's opponents have argued that if banks are forced to offer more choices of card networks, it will become less profitable for airlines to invest in their rewards programs.
Airlines for America, an airline industry trade group, has said the bill would have negative repercussions for millions of consumers who use credit cards to accrue points, including airline miles.
The elimination of such reward programs would also create negative economic consequences, the airline industry group wrote in a recent report. "The economic harm of this misguided policy will have a much larger impact than just travel and tourism and will harm consumers who use these rewards to buy groceries and gas," the report stated.
J. Scott Kirby, CEO of United Airlines Holdings, said earlier this month that the legislation, if passed, would "kill rewards programs."
Such programs "would not exist anymore," Kirby told analysts on United's third-quarter earnings call.
Others have argued that the Durbin-Marshall bill faces long odds.
"Obviously, that's legislation that we're watching carefully, and if it in fact becomes the law, we will adjust accordingly," Peter Carter, the CEO of Delta Air Lines, said in July during the company's second-quarter earnings call. "But we don't really think it has a good opportunity to be ultimately signed into law."
Isaac Boltansky, director of policy research at the investment bank BTIG, noted that Durbin has previously been successful in attaching certain legislative priorities to so-called must-pass bills. The Illinois senator, who has faced off against banks in the past, could try the same approach again late this year.
Still, Boltansky wrote: "Our base case is that the odds of the Credit Card Competition Act becoming law this year are no higher than 20%."
