The Louisiana Bankers Association's (LBA) said it seconds prior criticism of Senate Bill 1838, known as the “Credit Card Competition Act,” which would require banks to offer merchants at least two network options, one of which cannot be Visa or MasterCard, for processing credit card transactions, thereby increasing security and fraud risks, according to the organization's leadership.
SB 1838 was introduced by U.S. Senator Richard J. Durbin (D-IL) and co-sponsored by Sens. Roger Marshall (R-KS), J.D. Vance (R-OH), Josh Hawley (R-MO), Peter Welch (D-VT), and Jack Reed (D-RI).
The LBA’s CEO, Ginger Laurent, told The Louisiana Record that the organization concurred the legislation could have a negative effect on credit card security.
Louisiana ranked No. 12 in the country for per-capita credit card fraud reports in 2023, according to statistics from the Federal Trade Commission.
Aside from the potential future issues of security and fraud, Laurent also pointed to the bill being one which “disrupts free enterprise.”
“[It] allows merchants to choose cheaper, less secure card networks that would expose customers and their credit card data to weaker cyber-security protections and increased fraud vulnerabilities,” Laurent said.
“The payment card system is governed by private contracts entered into among merchants, networks and financial institutions; the bill disrupts free enterprise.”
A report released in May by the Electronic Payments Coalition found that, since 2020, the ownership of rewards cards has grown fastest among low-to-moderate-income individuals.
Laurent added that the LBA had communicated its concerns on the legislation to the state’s two U.S. Senators, John Neely Kennedy (R-LA) and Bill Cassidy (R-LA), and their respective staffs.
Glenn Grossman, the Director of Research at financial advisory firm Cornerstone Advisors, agreed that if the CCCA were to be passed, it could lead to an increase in credit card fraud.
“If the CCCA were to be approved, the routing of credit card transactions would move from a ‘single pipe’ to ‘multiple pipes’ of data flowing from merchants to issuers,” Grossman told Federal Newswire.
“Today, card issuers depend on the networks to profile and identify fraud. They see all the transactions on their network and have developed fraud detection capabilities that would not be possible in a fragmented structure the CCCA would create,” Grossman said.
Grossman added that Visa has invested billions on fraud detection.
“The investment builds trust and in return consumers use their credit cards,” said Grossman. "Zero liability means something to consumers. With the CCCA, it is possible that promise is gone."
In a report released in July 2023, “The True Impact of Interchange Regulation: How Government Price Controls Increase Consumer Costs and Reduce Security,” Grossman wrote that studies show 79% of consumers choose credit cards as a payment option because of their data security.
Grossman said that, under the legislation, credit card authorizations would be allowed to flow across many “pipes” which would eliminate much of the “fraud fighting value that Visa and MasterCard have implemented.”
The bill would not require new networks to provide fraud detection, Grossman explained.
“It is expected these new networks would rather just route data, not ensure the authorization is legitimate. It is a fraudster’s dream come true!” he said.
The Federal Trade Commission reported receiving 114,348 complaints of fraud in which the payment method was credit card in 2023. Those fraud complaints accounted for $246.1 million.
The FTC also reported receiving 416,582 reports of credit card identity theft in 2023.
The bill is currently pending before the Senate’s Committee on Banking, Housing and Urban Affairs.
Where did your state rank in 2023 rank for credit card reports per capita?
Source: WalletHub / Federal Trade Commission data
| State | Credit Card Fraud Reports per Capita |
| Florida | 22.01 |
| District of Columbia | 21.76 |
| Georgia | 19.59 |
| Nevada | 18.3 |
| California | 16.08 |
| Delaware | 15.95 |
| Pennsylvania | 15.06 |
| Texas | 13.37 |
| Maryland | 13.05 |
| South Carolina | 12.79 |
| New York | 12.65 |
| Louisiana | 12.51 |
| New Jersey | 12.46 |
| Illinois | 12.44 |
| Arizona | 11.21 |
| Alabama | 10.62 |
| Massachusetts | 10.01 |
| Michigan | 9.52 |
| North Carolina | 9.52 |
| Connecticut | 9.41 |
| Mississippi | 8.98 |
| Virginia | 8.95 |
| Ohio | 8.86 |
| Colorado | 7.78 |
| Rhode Island | 7.77 |
| Indiana | 6.95 |
| Tennessee | 6.68 |
| Nebraska | 6.09 |
| Kansas | 6.04 |
| Washington | 5.8 |
| Arkansas | 5.75 |
| Missouri | 5.66 |
| Oregon | 5.53 |
| New Hampshire | 5.48 |
| Wisconsin | 5.41 |
| Utah | 5.08 |
| Minnesota | 5 |
| Oklahoma | 4.89 |
| Hawaii | 4.8 |
| Iowa | 4.69 |
| Kentucky | 4.3 |
| New Mexico | 4.29 |
| North Dakota | 4.22 |
| Idaho | 4.02 |
| Wyoming | 3.82 |
| Maine | 3.78 |
| Montana | 3.76 |
| Alaska | 3.64 |
| West Virginia | 3.63 |
| Vermont | 3.49 |
| South Dakota | 3.33 |
From the Louisiana Record: Reach Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com