WASHINGTON, Oct. 19 (UPI) -- U.S. Sen. Richard Durbin, D-Ill., is challenging Wells Fargo over a debit card fee it is testing in five states, his office said Wednesday.
In a letter to Wells Fargo Chairman, President and Chief Executive Officer John Strumpf, Durbin said, "It is unfortunate, though not surprising, that your bank is now blaming swipe fee reform for your decision to impose this significant new fee on your loyal customers. … Because Wells Fargo has not made publicly available any of its own cost or revenue data regarding debit transactions."
Durbin then asserts Wells Fargo would make a lucrative "$1.22 billion in annual debit interchange revenue after swipe free reform," referring to the U.S. Federal Reserve's recent cap on charges banks can impose on customers using their debit cards at retail outlets.
The $1.22 billion, "far exceeds any reasonable measure of the cost to Wells Fargo of conducting debit transactions," Durbin said.
Durbin said a Nilson Report indicated Wells Fargo debit cards were used for more than 5 billion purchases in 2010. "Multiplying this figure by the Fed's 44 cent average results in an estimated $2,230,976,000 in debit interchange revenue for Wells Fargo in 2010," the senator said.
However, the Fed's new rule limits that fee to an average of 24 cents, which would, if 5 billion purchases occurred with Wells Fargo debit cards, amount to a cash cow bringing in $1.2 billion in annual revenue, Durbin said.
In addition, he said, "This does not even count the fact that Visa and MasterCard on October 1 dramatically and unreasonably increased the interchange rates that merchants will pay to Wells Fargo on small ticket and prepaid card transactions."
Durbin said it was the bank's call on what to charge its customers. "However, it also remains appropriate for members of Congress to ensure that all bank fees are set in a transparent and competitive market environment," he said.