City Desk

Dick Durbin Wants Vince Gray to Admit Durbin’s Not Responsible for Parkmobile Fees

Parkmobile, the company that allows Washington drivers to pay for Washington street parking by phone, raised its transaction rates a couple cents yesterday, attributing the increase on Dodd-Frank banking legislation and Illinois Sen. Dick Durbin's Durbin Amendment to the bill.

That didn't sit well with Durbin, who sent Parkmobile CEO Albert Bogaard an open letter this afternoon saying that his amendment didn't cause the increased transaction fees from banks that Parkmobile blames for the increase. And he wants Mayor Vince Gray to admit that he's right.

"Your company’s email and press release incorrectly blame the Durbin Amendment for increasing your processing fees," Durbin writes. "My amendment did not raise these fees, it put a ceiling on them."

What's going on here? We Love D.C. has a good explanation, but the shorter version is that the Durbin Amendment reduced how much banks could charge merchants like Parkmobile for debit card transactions. With this revenue stream reduced, the banks cut the discounts they offered on small transaction fees to companies like Parkmobile, which in turn raised their own transaction fees for customers.

"Blaming the Durbin Amendment for Visa’s and MasterCard’s decision to raise your fees is like blaming a traffic cop for a driver’s decision to speed and drive recklessly," Durbin writes.

Gray's involved because District Department of Transportation director Terry Bellamy provided a quote for a Parkmobile press release about the increase. Since the city's involved, Durbin wants Gray to admit that Durbin had nothing to do with the new fees.

"I request that you and DDOT make clear that the District of Columbia Government does not agree with Parkmobile’s analysis of the cause of these fee increases or endorse Parkmobile’s disingenuous assignment of blame," Durbin wrote in a letter to Gray.

Durbin's letter to Gray

 

October 26, 2012

The Honorable Vincent C. Gray

Mayor

District of Columbia

1350 Pennsylvania Avenue, NW, Suite 316

Washington, DC 20004

Dear Mayor Gray:

Yesterday, Parkmobile USA, Inc., operating under an exclusive contract with the District Department of Transportation (DDOT) to provide mobile parking payment services, claimed that certain transaction fees charged to District customers would go up due to increased costs triggered by the Durbin Amendment that Congress passed in 2010. This information is simply not true. And it is inappropriate for a contractor, using District resources, to offer up incorrect, unsolicited legislative analysis while hiding behind poorly reasoned excuses for their own price hikes.

What’s next? Emails to District residents from contractors opining on the Affordable Care Act? Press releases blaming higher school lunch prices on the Farm Bill?

As you may know, this transaction fee increase is actually due to Visa’s and MasterCard’s decision to raise fees on Parkmobile. The Durbin Amendment is simply a law that was passed to put a much-needed ceiling on Visa’s and MasterCard’s unreasonably high and ever-rising debit fee rates. It is also troubling that Parkmobile’s press release contained a quote from DDOT Director Terry Bellamy, thus creating the impression that the District of Columbia government associates itself with the misleading views that Parkmobile has expressed.

Mayor Gray, in order to avoid any potential confusion, I request that you and DDOT make clear that the District of Columbia Government does not agree with Parkmobile’s analysis of the cause of these fee increases or endorse Parkmobile’s disingenuous assignment of blame.

As Chairman of the Senate Appropriations Subcommittee on Financial Services and General Government, I remain very interested in the operations of the District of Columbia. And I enjoy working with you and other District leaders. But, I’m skeptical of contractors that attempt to blame fee increases on legislation that clearly has created the opposite effect. I don’t believe the District is well served by this maneuver.

Sincerely,

Richard J. Durbin

United States Senator

 

Durbin's letter to Parkmobile's Bogaard

October 26, 2012

Albert Bogaard, CEO

Parkmobile USA Inc.

3200 Cobb Galleria Pkwy

Ste 100

Atlanta, GA 30339

Dear Mr. Bogaard:

On October 25, a Parkmobile marketing and sales support manager sent a grossly misleading email to Parkmobile customers in the District of Columbia. The email claims that “Beginning October 29th, transaction fees in DC will increase from $0.32 to $0.45 due to increased costs triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin Amendment.”

This email follows a press release that Parkmobile issued on October 23 (“Parkmobile USA, Inc. introduces the Parkmobile Wallet in the District of Columbia”) in which you claim that a new Parkmobile product “offer[s] a relief from the impact of recent federal legislation passed by Congress.”

Your company’s email and press release incorrectly blame the Durbin Amendment for increasing your processing fees. My amendment did not raise these fees, it put a ceiling on them. Visa and MasterCard raised your fees, and as a merchant you were helpless to stop them short of the ceiling the new law created. Instead of honestly telling this story, you decided to side with the credit card giants and refuse to tell your customers what really happened. So, I ask that you retract these misleading communications and provide your customers with a clarification that sets the record straight.

The decision whether or not to increase transaction “swipe” fees rests with Visa and MasterCard alone. The Durbin Amendment was crafted to put a limit on exactly the type of unreasonable swipe fee increases that you lament. Blaming the Durbin Amendment for Visa’s and MasterCard’s decision to raise your fees is like blaming a traffic cop for a driver’s decision to speed and drive recklessly.

Additionally, your company has shown a fundamental lack of understanding about what the Durbin Amendment actually does. Your press release quotes a local official who endorses Parkmobile’s new product because “changes outside our control have caused credit card fees to rise.” The Durbin Amendment did not regulate credit card fees; it only regulated debit card fees on certain transactions.

Visa, MasterCard and their big bank allies have made tens of billions each year by charging American businesses like yours unreasonably high swipe transaction fees. The Durbin Amendment took a modest step toward reining in this unfair swipe fee system because high swipe fees harm consumers and businesses alike. The fact that Visa and MasterCard are still able to impose unreasonable swipe fee increases on some debit and all credit card transactions is not an indictment of the Durbin Amendment, but rather shows that more must be done to rein in Visa and MasterCard’s unfair swipe fee system. Instead of criticizing my efforts to stop Visa and MasterCard’s abusive fee increases, I urge you to instead join those efforts. Your business and your customers will be better served if you do.

Sincerely,

Richard J. Durbin

United States Senator

Cc: Mayor Vincent C. Gray

Photo by Darrow Montgomery

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  • FairandInformed

    Dick Durbin passed his amendment in the dead of night without putting it before a standing committee and with reckless disregard for the human consequences. Since the ill-considered amendment passed, and as a direct result of that amendment, banking fees have gone up around the country hurting working class folks. In addition fees like this parking fee have gone up. Thanks, Dick. Did you really think you could take revenue from an entire industry and have there be no repurcussions?

  • http://www.welovedc.com Don

    "Human consequences" seems a little hyperbolic. "Corporate resistance to diminished revenues" and "ripple effects" seems more accurate. Those are valid ideological objections, but this "dead of night" phrasing that gets trotted out whenever someone doesn't like the way something happens in Congress is tiresome. Amendments and committees and wheeling-dealing is the way of the current system and it's fair to hate on it. But pretending that any of it represents business-as-unusual is just stumping.

    From a risk standpoint the Durbin amendment is hard to argue with. Interchange fees for debit transactions that are just as high as credit transactions are simply indefensible. They're lower risk both with regards to theft and no-repayment scenarios. It's no coincidence that the banking industry spent the last ten years trying to push consumers into using their debit cards for pinless transactions.

    From a larger system standpoint the Durbin amendment comes down pretty well to two things - whether you care or not that costs were being shifted around before or are being shifted now and whether you believe a system whether some groups benefit from the higher costs imposed on others.

    I'd argue that if the banks have an intrinsic right to the same level of profit and now they have to raise charge costs because they'd been keeping them low on the back of increased debit costs... then that's a superior system. It's more fair.

    Personally I think that's bunk. We have poor competition in consumer credit clearing/authorization and the resulting near-monopoly charges rates that are hard to defend from a cost-of-provision standpoint. I'm ambivalent about dealing with that through regulation of prices but I'm not going to die on the hill to say that V/MC/Amex should get a full $0.40 to take in a 40 digit electronic message and return a thumbs up or down on the transaction.

  • http://www.divasnrides.com Ron The Don

    Let me guess! Parkmobile is using the same PR strategy the now defunct Back Alley Waffle used when they blamed Groupon for their business struggles. We saw how that worked out for them, right!

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